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ESPON project 3.4.1.

Europe in the World

Final Report – Vol.1

Co-financed by the European Community through the Interreg III ESPON Programme

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ESPON 3.4.1 Europe in the World

Final Report – Vol.1

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This report represents the final results of a research project conducted within the framework of the ESPON 2000-2006 programme, partly financed through the INTERREG programme. The partnership behind the ESPON programme consists of the EU Commission and the Member States of the EU25, plus Norway and Switzerland. Each partner is represented in the ESPON Monitoring Committee. This report does not necessarily reflect the opinion of the members of the Monitoring Committee. Information on the ESPON programme and projects can be found on www.espon.lu” The web side provides the possibility to download and examine the most recent document produced by finalised and ongoing ESPON projects. ISBN number: work in progress; request sent to AFNIL This basic report exists only in an electronic version. Word version: © The ESPON Monitoring Committee and the partners of the projects mentioned. Printing, reproduction or quotation is authorized provided the source is acknowledged and a copy is forwarded to the ESPON Coordination Unit in Luxembourg.

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Participants

Scientific coordination This work was coordinated by Claude Grasland (Professor at University Paris 7, UMR Géographie-cités) and Clarisse Didelon (Post PhD at University Paris 7, UMS RIATE)

Core Team RIATE: Bernard Corminboeuf, Marc Guerrien, Nicolas Lambert and Isabelle Salmon IGEAT: Laurent Aujean, Gilles Van Hammes, Pablo Medina, and Christian Vandermotten ITPS: Mats Johansson and Daniel Rauhut LADYSS: Pierre Beckouche and Yann Richard UMR Géographie-cités: Nadine Cattan, Christian Grataloup, Guillaume Lesecq and Christine Zanin Experts CRS HAS: Györgyi Barta, László Dancs, Imre Nagy, Alexandra Szigeti, and Péter Strömpl TIGRIS - "Alexandru Ioan Cuza" University: Octavian Groza, Ionel Muntele, Alexandru Rusu, Oana Stoleriu and Georgiana Voicu ETH Zurich: Marco Keiner GRUPO SOGES: Alberto Vanolo ORMES: Mohamed Charef and M’hamed Wahbi

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TABLE OF CONTENTS

Figure p11 Maps p13 Tables p15 Boxes p16 1) EXECUTIVE SUMMARY P17 1.1. New tools for ESPON researchers: WUTS and Euromed template p18 1.1.1 World unified territorial system p18 1.1.2 The Euro-Mediterranean template p18 1.2 The “size” of ESPON in the World p20 1.3 Area of influence of ESPON p22 1.4 ESPON and its neighbourhood p24 1.5 Internal differentiation of ESPON territory p26 1.6 Policy issues p28 2) INTRODUCTION P29 2.1 Wide Wild World p29 2.2 Which vision of Europe in the World? P33 2.2.1 Centre/Periphery: the Triad and its region p34 2.2.2 The north-south opposition: still not obsolete? P35 2.2.3 Permanent features and geopolitical changes p36 2.2.4 The dialogue between civilisations p36 2.2.5 And still for lack of anything better, the continents p37 2.2.6 Conclusion p40 2.3 Ambitions and limits of the project ESPON 3.4.1. p42

3) PART A: DELIMITATION OF WORLD REGIONS P45 3.1. Introduction p45 3.1.1 Options for World Regionalisation p45 3.1.2 Definition of regions p46 3.1.3 Which method of regionalisation? P47 3.2 In search for World Regions p49 3.2.1 A mental approach: the perception of World Divisions p49 3.2.2 The limits of political division of the World p57 3.2.3 Functional division of the World based on economic and demographic flows p63 3.2.4 Homogeneous regions and territorial discontinuities: the spatial dimension of inequalities of development p67 3.3 World Unified Territorial System (Wuts) p82 3.3.1 Introduction: from NUTS to WUTS … p82

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3.3.2 The World in 3 Global Regions (WUTS1) p84 3.3.3 The World in 7 Macro Regions (WUTS2) p87 3.3.4 The World in 17 Meso Regions (WUTS3) p89 3.3.5 The European Neighbourhood in 12 Micro Regions (WUTS4) p91 3.4 Conclusion: A tool for benchmarking between ESPON 29 and the rest of the world p93 3.4.1 Human development in 2002 p95 3.4.2 Distribution and the evolution of GDP per capita (1980-2004) p97 3.4.3 Financial flows p99 4) PART B: HOW ESPON IS EMBEDDED IN THE WORLD BY FLOWS? p101 4.1 Introduction p101 4.2 A functional approach: Triad and the centre-periphery division of the World p104 4.2.1 The Place of ESPON in the World Economy p104 4.2.2 Trade and inequalities p107 4.2.3 Trade flows and the Triad p110 4.3 Networking ESPON 29 through air flows p114 4.3.1 Re-thinking the hierarchy, areas of influence, borders and other concepts p114 4.3.2 The conventional approach based on passenger numbers p115 4.3.3 An alternative approach of World global network derived from Tobler’s work p120 4.4 Demographic flows towards Europe p126 4.4.1 Potential demographic & economic complementarities and figures of net migration p126 4.4.3 Migrations toward the ESPON space 130 4.4.4 What it is at stake concerning the migration flows toward Europe p132 4.5 An attempt of delimitation of ESPON29 “influence area” or “relational networks” in the World p136 4.5.1 The choice of criteria p136 4.5.2 An index of global influence of ESPON29 in the World? P138 4.5.3 Historical heritages as determinant factors of relations p140 4.5.4 A strategic typology of ESPON 29 relations with the World p142 4.6 Conclusion p145 4.6.1 Towards a strategic vision of the ESPON 29 territory in the World p145 4.6.2 Policy recommendation: aid Flows and Millennium Objectives p147 4.6.3 Promoting a new template for further researches (ESPON II?) p152 5) PART C: ESPON IN ITS NEIGHBOURHOOD P154 5.1 Introduction; two European regionalisms p154 5.2 How the neighbours impact the ESPON territory p157 5.2.1 Neighbours’ weight p157

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5.2.2 Territorial stakes and recent impacts on ESPON territory p159 5.3. Continuity and discontinuity, eastward and southward p161 5.3.1 Methodology for discontinuity and borders analysis p161 5.3.2 The West-East “stair gradient” p163 5.3.3 The double North-South discontinuity p170 5.3.4 Internal discontinuity: the case of Switzerland and Norway p174

5.4 Networking Euromed: flows in the European region p175 5.4.1 People p175 5.4.2 Trade and financial flows p177 5.4.3 Public funds p181 5.4.4 Air flows p185 5.5 Conclusion: Is the whole better than the sum of its parts: in varietate Concordia p189 5.5.1 Redistribution of population in Euro-Mediterranean (1950-2050) p189 5.5.2 Ageing and sustainable demographic development p191 5.5.3 Human development as a diffusion process with barriers effects? p193 5.5.4 The past and future evolution of the political weight of European Union in the World p195 5.5.5 Policy orientations p197 6) PART D INTERNAL DIFFERENTIATION OF EUROPEAN TERRITORY REGARDING

TO THE RELATIONS WITH THE REST OF THE WORLD P201 6.1 Introduction p201 6.2 Internationalization of regions and nations in Europe: p202 6.2.1 Trade flows p202 6.2.2 Regional hierarchy in the world and European economies p214 6.2.3 Air flows and gateway cities: differentiating or re-balancing the ESPON territory? P217 6.3 The strengths and weaknesses of ESPON regions in the face of globalization p222 6.4 Synthesis p225 6.5 Conclusion p231 7) CONCLUSION P232 7.1 The false problem of the boundaries of Europe … p233 7.2 The real problem of multilevel approach p236 7.3 One World, millions of places p240 References p243

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FIGURES

Figure 1 Discontinuities between ESPON 29 and its southern neighbours 26 Figure 2 Evolution of the share of World population and World GDP (pps)

of the European Union (1950-2020) ............................................26 Figure 3 : More than 4000 deaths in 10 years at the borders of EU........32 Figure 4 : Tectonic plates ................................................................41 Figure 5 : Olympic rings ..................................................................42 Figure 6 : The Centre-Periphery vision of the World...........................112 Figure 7 : The Network-Archipelago Vision of the World .....................112 Figure 8 : external trade of Western Europe by type of product, with North

America, Asia and Latin America (1998-2002), in billions of current $............................................................................................117

Figure 9 : Repartition of migrants according to their education level and their country of residence in 2000 .............................................141

Figure 10 : Repartition of migrants according to their education level and their WUTS of origin in 2000 (neighbouring countries)..................141

Figure 11 : Correlation between trade balance and global influence of ESPON 29 ..............................................................................154

Figure 12 : Share (%) of intra-regional trade in total trade of each grouping................................................................................162

Figure 13 : Discontinuities between ESPON 29 and its eastern neighbours............................................................................................173

Figure 14 : Evolution of transit traffic in Latvia. ................................176 Figure 15 : The territorial organization scheme in Central-east Europe.177 Figure 16 : Romania in the core of the Euro-Asian peripheries ............178 Figure 17 : Discontinuities between ESPON 29 and its southern neighbours

............................................................................................180 Figure 18 : UE15’s goods trade 1980-2003 (imports + exports, b Euros)

............................................................................................188 Figure 19 : 2000-04 evolution (%, value) of UE25 goods trade with

various neighbours..................................................................189 Figure 20 : ESPON countries are the main pole for the neighbours’

economy : The case of Tunisian inflows of FDI, breakdown by geographical origin..................................................................190

Figure 21 : European aid subsidies, by region, 1991-2003 .................194 Figure 22 : OECD Countries’ public aid in 2003 and 2004 :Breakdown by

donors and beneficiaries ..........................................................195 Figure 23 : Comparison of sustainable demographic development of

ESPON, USA, Japan and China (1980-2030) ...............................202 Figure 24 : Sustainable demographic development in EuroMediterranea

(1955-2045) ..........................................................................202 Figure 25 : Evolution of the share of World population of the European

Union (1950-2020) .................................................................206 Figure 26 : Evolution of the share of World GDP (pps) of the European

Union (1950-2020) .................................................................206

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Figure 27 : Evolution of the share of EU25 in the trade of European countries (1960-2000).............................................................218

Figure 28 : Geographical structure of the trade of different types, by WUTS3, 1996-2000 221 Figure 29 : Regional world cities and their spheres of influence.................. 249 Figure 30 : Hierarchical organisation of system and sub-systems.............. 250

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MAPS Map 1 : The World in 17 meso regions..................................................................... 19 Map 2 : The European Neighbourhood in 12 micro regions (WUTS4) ......... 19 Map 3 : Evolution of World share of population and GDP (1952-1998) ...... 21 Map 4 : Joint evolution of the share of the World population and GDP PPS

from 1950-54 to 1996-2000 ................................................................................. 21 Map 5 : Typology of ESPON29 influence in the World ........................................ 24 Map 6 : Synthesis of the regional insertion in the world economy ............... 28 Map 7 : cartographic templates for ESPON............................................................. 34 Map 8 : cartographic template for the World ......................................................... 34 Map 9 : International organisations limits ............................................................... 57 Map 10 : Countries limits................................................................................................ 57 Map 11 German firms dividing the World ................................................................ 60 Map 12 : British firms dividing the World ................................................................ 60 Map 13 : French firms dividing the World ............................................................... 60 Map 14 : Non Governmental Organisation dividing the World ........................ 61 Map 15 : International Organisation dividing the World.................................... 61 Map 16 : ESPON community dividing the World ................................................... 63 Map 17 : Europe as “Lost Continent” ........................................................................ 65 Map 18 : Spatial and political distribution of World population in 1999...... 67 Map 19 : Spatial and political distribution of World GDP (pps) in 1999 ...... 69 Map 20 : Major bilateral trade flows between states of the World (96-

2000) .............................................................................................................................. 72 Map 21 : Regionalisation of the World based on trade flows 96-2000 ........ 75 Map 22 : Terrestrial borders extended to short maritime distances ............ 77 Map 23 : Discontinuities of Human Development in the World in 2002...... 79 Map 24 : The components of Human Development in the World in 2002.. 81 Map 25 : Discontinuities of GDP/inh. in the World in 2002 .............................. 83 Map 26 : Evolution of World share of population and GDP (1952-1998) ... 85 Map 27 : Joint evolution of the share of the World population and GDP PPS

from 1950-54 to 1996-2000 ................................................................................. 86 Map 28 : Demographic potentialities for the XXIth century .............................. 89 Map 29 : The World in 3 global regions (WUTS1) ................................................ 94 Map 30 : The World in 7 Macro regions (WUTS2) ................................................ 96 Map 31 : The World in 17 meso regions (WUTS3)............................................... 98 Map 32 : The European Neighbourhood in 12 micro regions (WUTS4) ..... 100 Map 33 : Share of the trade with ESPON 29 ........................................................ 114 Map 34 : Share of each country in the External trade of ESPON 29 .......... 115 Map 35 : Dominant trade orientations 1996-2000 ............................................ 120 Map 36 : International air traffic ............................................................................... 124 Map 37 : International air traffic, EU traffic excluded ...................................... 125 Map 38 : Major international air flows (intra-EU flows included)................. 126 Map 39 : Major International air flows (intra-EU flows excluded) ............... 127 Map 40 : Global air interactions in the World in 2000...................................... 131 Map 41 : Push-Pull Factors in 1999 ......................................................................... 134 Map 42 : Net number of migrants at WUTS4 level 2000-05.......................... 134

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Map 43 : Push-Pull Factors in 1999 in Euromed Area ...................................... 136 Map 44 : Net number of migrants in Euromed 2000-05 ................................. 136 Map 45 : Origin of migrants in ESPON according to the country of birth . 138 Map 46 : Global influence area of ESPON29 in the World............................... 146 Map 47 : Colonial heritage of ESPON 29................................................................ 148 Map 48 : Cultural Networks of ESPON 29.............................................................. 148 Map 49 : Typology of ESPON29 influence in the World ................................... 152 Map 50 : The Euro Mediterranean template ......................................................... 161 Map 51 : Imports and exports of EU’s neighbours. ........................................... 166 Map 52 : Bilateral intensity of the Russian trade ............................................... 167 Map 53 : North-South and East –West sample of states used for the

visualisation of discontinuities............................................................................ 170 Map 54 : Number of Moroccan citizens listed in consular services abroad in

2004 – (in Euromed region). .............................................................................. 181 Map 55 : Variation of number of Moroccan citizens listed in consular

services abroad by country from 2002 to 2004.......................................... 181 Map 56 : Egypt tourism ................................................................................................ 184 Map 57 : Net official development assistance to neighbourhood and share

of the EU (members and Commission) from 2001 to 2004 (annual average) ...................................................................................................................... 193

Map 58 : Major air connexions between Western Europe and its neighbourhood .......................................................................................................... 196

Map 59 : Internal connexions of the neighbourhood of Western Europe . 198 Map 60 : Population in Europe and its Neighbourhood in 2030 ................... 200 Map 61 : Diffusion of human development in Euromediterranean countries

between 1975 and 2002 ....................................................................................... 204 Map 62 : opening rate of the trade of European countries with non ESPON

countries, 1996-2000 (ex map 43) .................................................................. 215 Map 63 : Share of ESPON in each ESPON country external trade of

merchadises, 1996-2000...................................................................................... 217 Map 64 : Classification of the countries regarding yo the geographical

orientation of their extra european trade, 1996-2000 ............................. 220 Map 65 : Share of trade of each country with different ESPON countries

........................................................................................................................................ 223 Map 66 : Location of the transnational headquarters, 2005.......................... 226 Map 67 : Location of the offices of advanced service firms ........................... 227 Map 68 : ESPON 29 Global Airports in 2000 ........................................................ 233 Map 69 : Finance and business services in the regional added value, 2002

........................................................................................................................................ 236 Map 70 : Synthesis of the regional insertion in the Wolrd economy .......... 239

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TABLES Table 1 : Major differences of Human development between neighbouring

states of the World in 2002 ................................................................................... 78 Table 2 : Major differences of GDP per capita pps 1996-2000 between

neighbouring states of the World in 2002 ....................................................... 82 Table 3 : Size of the 3 World global regions (WUTS1)....................................... 93 Table 4 : Size of the 7 World macro regions (WUTS2) ...................................... 96 Table 5 : Size of the 17 World meso regions (WUTS3) ..................................... 97 Table 6 : Size of the 11 micro regions of European Neighbourhood in

EurAfrica (WUTS4) .................................................................................................... 99 Table 7 : Distribution of Human Development with WUTS............................. 104 Table 8 : GDP PER CAPITA. Annual average GDP per capita (in constant

US 2000 dollars) distributed in periods of five years ................................ 107 Table 9 : FDI Inflows, Annual average inflows in millions of current US

dollars, distributed in periods of five years (World Bank)....................... 109 Table 10 : Opening rate of Europe, USA and Japan. ........................................ 118 Table 11 : Trade between WUTS3 regions and the Triad in 1996-2000 ... 121 Table 12 : Most important air flows in 2000 (millions of Passengers) ....... 129 Table 13 : Most important air connexions in 2000 (millions of

Passengers.km)........................................................................................................ 129 Table 14 : Classification of the World Cities according to air connexions in

2000.............................................................................................................................. 132 Table 15: Criteria of delimitation of ESPON29 Influence Area in the ......... 144 Table 16 : Maximum and minimum values of ESPON 29 Influence ............ 146 Table 17 : Trade of ESPON29 with the rest of the World by type of

proximity ..................................................................................................................... 154 Table 18 : The Millennium Development Goals ................................................... 156 Table 19 : Evolution of population by state in EuroMediterranea (1950-

2050) ............................................................................................................................ 200 Table 20 : Main connexions of ESPON 29 airports according to air traffic

weighted by distance in 2000. ........................................................................... 229 Table 21 : Correlation between internationalisation indicators and the

component 1 of the PCA analysis...................................................................... 238 Table 22 : Correlation between technological indicators and the

component 1 of the PCA analysis...................................................................... 238 Table 23 : Economic performances of some regions includint industrial

districts, 1995-2002 ............................................................................................... 240

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BOXES Box 1 : Options for World Regionalisation............................................................... 53 Box 2 : ESPON community’s vision of the World (Cf. FR - Vol 3 ) ................ 63 Box 3 : Labour Mobility and education level......................................................... 140 Box 4 : The UE new border in Hungary. Asymmetric relations with

Romania and Serbia ............................................................................................... 174 Box 5 : Russia and Baltic states: the various scales of a difficult relation175 Box 6 : The case of Romania: an “entre-deux” space...................................... 177 Box 7 : The mobility between Morocco and Europe: a common subject of

concern........................................................................................................................ 181 Box 8 : The European policy of the Swiss federal council............................... 183 Box 9 : The geography of Italian internationalisation : relations with

Central Eastern European and South and Easter Mediterranean countries ..................................................................................................................... 191

Box 10 : Switzerland and the European Union.................................................... 224 Box 11 : The impact of relocalisation on the position of ESPON regions in

value chains: The example of textile value chain in three marshallian districts........................................................................................................................ 240

Box 12 : Pattern of migration in Europe ................................................................ 241 Box 13 : Definition of the environment of a system ......................................... 246

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1) EXECUTIVE SUMMARY The World is becoming increasingly complex and thus cannot be analysed in a spatial framework restricted to the European Union or to the ESPON area even if the common feeling of “European decline” reinforces the temptation to ignore what is happening ‘outside’. The elaboration of the ESPON cartographic template at the beginning of the programme is symptomatic of that fact with its limited framework of 29 countries. As regards ESPON, important milestones were reached with the preliminary study ‘One Europe in the World’ in the context of the ESPON project 3.1, which proposed a new cartographic template at world scale, and, ultimately, with the launch of the ESPON project 3.4.1 - “Europe in the World”. In this project we decided to focus initially on the elaboration of the long term integrated tools, which we hope will provide the groundwork and a solid basis for what is to follow in this field of study. We therefore elaborate new databases, a new hierarchical division of the World and new templates all of which are among the main outputs of our work (see I). Our main concern however was to introduce the 4th dimension (the World) into the analysis of the ESPON area, which entailed the proposing of a joint analysis of the influence of ESPON on the rest of the World and vice versa. This first volume presents a relatively short synthesis illustrated by original maps tables and figures and organized around our four key questions which try to examine the interaction between ESPON and the World at different geographical scales. The first part, “The Division of the World” proposes a regionalisation of the World according different criteria, with the main objective being to propose a benchmarking of the position of ESPON in respect of other World regions (see II). The delimitation of the ESPON influence area is then studied (see III) by examining different types of relations and flows between ESPON and the rest of the World. The third part focuses on the neighbouring countries and their functional and (where applicable) their potential political integration into the ESPON functional area within the perspective of the European Union enlargement question and the European Neighbourhood Policy (see IV). Finally, in the fourth part we look at the internal differentiation of the ESPON area according to globalisation while trying to measure the strengths and weaknesses of ESPON regions in respect of the demands of the global economy.

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1.1. New tools for ESPON researchers: WUTS and the Euromed template

1.1.1. World unified territorial system Many divisions of the World in “regions” (clusters of states) are actually used by international organisations, either private (transnational firms) or public (UN agencies etc). A great variety of solutions to this question however exist making it impossible to use any of them as a reference point for ESPON work. We have therefore produced a tool that is the elaboration of a harmonised hierarchical system of the World called WUTS (World Unified Territorial System) (map 1). Our WUTS proposal is organised into 5 hierarchical levels, from the state level (WUTS 5) to the World level (WUTS 0). It is based on objective criteria produced in the context of the various research efforts conducted during the project and even if it suffers from certain limits we hope that the WUTS system will provide a useful tool for European policymakers. Its major point of interest is to make a multiscalar analysis of the position of ESPON in the World easier with the harmonisation of territorial units on the World scale to fit European questions.

1.1.2 The Euro-Mediterranean template Limiting the research conducted in the ESPON programme to a focus on the EU29 is potentially to generate a number of serious theoretical and practical mistakes and omissions in the analysis of the main trends shaping the European territory. The strategic vision of the ESPON area must therefore be broader. We therefore build a Euro-Mediterranean template widening the vision of ESPON, based on the analyses conducted in the project and showing the importance of the Southern and Eastern neighbours for ESPON. The projection used to build the map template is centred on ESPON and is enlarged to the South by the North African countries, to the East by the Balkan countries plus Turkey, Russia, the countries of the Caucuses and finally by those of Central Asia (map 2). This pan-European view should be taken into account by European policymakers when elaborating long-term strategies for the European Union. In addition, a WUTS4 level regionalisation has been elaborated for this new template for the purpose of analysing in more detail the functional European neighbourhood. Micro-regions are particularly useful for the analysis of this functional neighbourhood because they introduce internal divisions both within the ESPON area and in its northern and Southern peripheries.

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Map 1 : The World in 17 meso regions

Map 2 : The Functional European Neighbourhood in 12 micro regions (WUTS4)

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1.2. The “size” of ESPON in the World One of the main purposes of the “Europe in the World” project was to outline a clear vision of the position of the ESPON area in the World vis-à-vis various indicators and, if possible, from a dynamic point of view. The acquisition of the long term “Maddison database” by the coordination unit allowed us to conduct a number of interesting studies on the evolution of the position of ESPON in the World, both in respect of ESPON’s share of World population and World wealth. With the analysis of the share of World population (map 3) and World GDP (pps) of each state it is clear that a number of very important changes have occurred during the last 50 years with a global transfer of population and wealth from the traditional centres of the Triad to their peripheries. The Triad centres have each experienced a lower increase in their population and wealth compared to the World trend. Their population and wealth did not decrease in absolute terms but their World share was strongly reduced in favour of other countries such as China (in terms of GDP) or India (for population). However this analysis of population and GDP pps at the state level is not sufficient for a sound evaluation of the real potential of states. For example, the stability of the level of GDP per capita (compared to the World mean) of a given state can be attributed to (1) the joint stability of its share of population and GDP, (2) a joint decline of both factors or (3) a joint increase of both factors. A synthetic typology of the evolution of the share of World population and GDP of the different states of the World (map 4) reveals that the centres of the Triad have generally experienced a joint decline in their share of GDP and population, but as the reduction was generally equivalent or higher for population than for GDP, they maintained or increased their level of GDP per inhabitant (type C and D). The states located in their immediate periphery have however generally experienced the reverse evolution, with a joint increase of their share of population and GDP in the World. Even if their GDP per capita did not necessary increase more quickly than the rest of the World, their economic and demographic size has clearly increased. The states in this situation (type A and B) define a “Golden ring” of growth from Mexico to Brazil, Northern Africa, the Middle East and south-eastern Asia. It is generally only in the deep peripheries, located at longer distance from the Triad that the worse situation of an increase in the share of population and a decrease of the share of GDP (type E) became manifest.

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Map 3 : Evolution of World share of population and GDP (1952-1998)

Map 4 : Joint evolution of the share of the World population and GDP PPS from 1950-54 to 1996-2000

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1.3 ESPON’s Area of influence Another way of defining ESPON’s place in the World is to study how it is embedded in the World by flows. The ESPON area is in a phase of rapid integration both inside ESPON but also between ESPON and the rest of the World. So particular attention should be paid to exchange and cooperation networks that highlight the integration pattern of ESPON area in the World economy.1 The analyses of air, trade and migratory flows (FR - Vol. 1 - part B) suggest that it is possible to identify a so-called ESPON “area of influence” in the World. As this area is related to ESPON’s “relational network” the result should not necessary be a continuous area organised in concentric circles. Four kinds of criteria have been used gathering 18 variables: accessibility (basic conditions for the development of relations), networks (common language and/or history), interactions (trade flows and air flows) and complementarities (difference of development) (map 5). A cluster analysis was then applied to the 18 variables in order to define synthetic types of relation between ESPON and the rest of the World. This analysis reveals four main types of ESPON external relations. Type A: Functional Integration: concerns the states localised in the immediate neighbourhood of ESPON whose trade and air relations are strongly polarised by ESPON. They do not necessary share a common language or religion and they have often been in conflict with ESPON states in the past. Type B: Responsibility: gathers together the states for which ESPON has significant responsibility for their future development, primarily because of Europe’s historical responsibility for colonisation and the exploitation of African countries. Secondly, because Africa could be a major centre of World production in the future while its young population will provide many opportunities. It is then strategically advantageous for ESPON to reinforce its historical relations with these countries forging a new relationship based on ‘common ownership’ of the political process. Type C: Opportunity: gathers together countries located far from ESPON but sharing a common language or history. They could potentially be very close allies for ESPON in a global World where services represent the major part of ‘added value’ and where scientific and cultural innovations are major factors in long term development. Type D: Challenge, highlights those countries which ESPON is less able to influence or to easily develop cooperative relations because of differences in

1 This is not to suggest however that the discrete processes of ‘political’ integration within the ESPON space and ‘functional’ integration between the ESPON space as a whole and the rest of the world are necessarily coterminous.

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language, geographical distance, or the weakness of historical relations. Many of these countries are however located in areas where significant stocks of energy resources are located and/or have dynamic new economies.

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Map 5 : Typology of ESPON29 influence in the World

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1.4 ESPON and its neighbourhood The research conducted on the measuring and cartography of territorial cohesion in the ESPON programme has established that the spatial organisation of heterogeneity is a crucial output for territorial planning. Perhaps even more interesting than the traditional global measurement of inequalities is the spatial dimension of heterogeneity that underlines the potential consequence of proximity between regions of different levels of development. From a spatial point of view (figure 1), this heterogeneity can define either regular gradients (if transition between different levels is smoothed) or homogeneous areas separated by territorial discontinuities (if the transition is sharp). This then raises the question of functional integration: are the ESPON area and its neighbours converging or diverging? The West-East “stair gradient”; the differences between countries are smoothed and relatively gradual when moving from West to East. Each state at an intermediate level is, at the same time, both attracted by its western neighbours and attractive to its eastern ones. The potential flows induced by this organisation are potential vectors for a diffusion of prosperity and development from west to east. The double North-South discontinuities were mainly visible, for the social criteria of life expectancy during the 1950’s In the 1990’s the sharp discontinuity previously marked by the Mediterranean Sea disappeared and we observed a gradual transition between Italy and Algeria. At the same time however the level of discontinuities increased between North African countries and Sub-Saharan ones. The potential demographic and economic dynamism of the North African countries is a major opportunity for ESPON, the harvesting of which probably provides the only possible way of maintaining its position as a global actor at World scale. The evolution of the share of population and GDP of ESPON at World scale decreased between 1950 and 2004 (figure 2). During this period however although this structural trend towards demographic and economic decline continued it was always balanced by the political dynamic of EU enlargement. It is important however to underline the fact that the question of political enlargement is a false one when considered from a strategic perspective. Many potential political solutions are however available to insure continuing strong linkages between the European Union and its neighbours. What is not at issue here is however the fact that the European Union will be obliged to further develop these linkages in the future if it wants to maintain its global influence in the next 20 years.

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Figure 1 Discontinuities between ESPON 29 and its southern neighbours

Figure 2 Evolution of the share of World population and World GDP (pps) of the European Union (1950-2020)

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1.5 Internal differentiation of ESPON territory

The final objective of the project “Europe in the World” is to provide a general overview of the relations between regions and cities of ESPON and the rest of the World, i.e. to study “the World in Europe”, or the influence of globalisation on the ESPON territory. The structural strength and weakness of the ESPON area have been evaluated on the basis of the sectoral economic structure as well as in relation to a number of indicators addressing the technological levels of the regions. A qualitative typology of regions according to these indicators allows us to identify the competitive or vulnerable regions or cities in respect of the World economy (map 6). Four major types of spaces can be identified according to their relations with the rest of the World. The highly internationalized metropolitan regions, i.e. most of the major ESPON cities; however there are differences in the level of internationalisation that allow us to identify the biggest world metropolises of London and Paris and some very internationalized but less important cities that function as gateways between Europe and the rest of the world. Central regions of Europe, the “blue banana”, without large international metropolises; Most of these areas are characterized by a solid economic structure with a relatively high share of business and financial services, as well as a high technological level. Peripheral and intermediary regions with a high share of personal services; they have low average technological and internationalization levels and are, to a certain extent, relatively indifferent to the rest of the world. These regions are often more dependant on national or European transfers Peripheral and intermediate regions with a high share of low-level technological manufacturing industries; They are subjected to international competition, notably in the textiles sector with low cost labour countries. However, in Eastern Europe, these regions mostly benefit from the spatial reorganization of this sector.

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Map 6 : Synthesis of the regional insertion in the world economy

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1.6 Policy issues

- Aid flows and millennium objectives ESPON countries have an important external role to play as they belong to the developed World. Development aid flows are a pillar of Millennium development Goal number 8 (“a global partnership for development”) where Europe has taken on a special role. But in order for this aid to be effective three conditions must be met: (1) Aid must be adequate enough to spark human development; (2) it must be cost effective with low transaction costs and (3) recipient countries must have primary responsibility for its use, that means that aid must be untied (FR – Vol.1 - part B).

- Lisbon strategy and the neighbourhood policy The main challenge for the European Union in the next 20 years is the decision to either integrate or to ignore the neighbourhood in general and North Africa in particular in its economic and political strategy. A “bunker strategy” designed to protect an economically declining and demographical ageing Europe from migrants would have tragic effects (FR – Vol. 1 - part C). The key to maintaining Europe’s place in the World could thus be the setting up of a Marshall plan directed to ESPON’s neighbours, primarily to the south, which would have many advantages for both Europe and its neighbouring countries.

- Territorial cohesion / ESDP The concept of territorial cohesion elaborated by European Union through the ESDP and actually applied inside the ESPON 29 territory should be reformulated in the wider context of an enlarged space towards both east and south. The spatial structure of heterogeneity (gradient or discontinuity) is not the same in each direction and different strategies thus need to be elaborated, in particular through a new shaping of INTERREG cooperation areas. Strategies for regional development elaborated inside ESPON territory could be transposed to neighbouring countries, in particular in the border regions.

- Polycentrism and gateway cities Gateway cities linking ESPON 29 to the world remain concentrated in the Pentagon, though opportunities exist for their development in peripheral regions, including cities located outside ESPON territory (Istanbul, Moscow, Tel Aviv, Dubai, and Jeddah). What is at stake here is the creation of a strategic plan for the elaboration of a pan-European network of network of cities insuring specialised functions : (i) connection to the global level (London, Paris, Frankfurt, Zurich, Amsterdam) (ii) specialised connections to selected area like Latin America (Madrid), Sub-Saharan Africa (Paris, Brussels), Central Asia and the Middle East (London, Istanbul), Russia (Frankfurt, Moscow), etc. (iii) internal

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north-south connections between northern Europe and both shores of Mediterranean Sea.

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2. INTRODUCTION 2.1. Wide Wild World

You know I've seen a lot of what the World can do And it's breakin' my heart in two Oooh, baby, baby, it’s a wild World It’s hard to get by just upon a smile Cat Stevens, Songs

In a famous paper entitled “Story of the Blues”2 , two reporters from The Guardian newspaper attempted to follow the geographical path of the production of a pair of Lee Cooper LC10s that cost £19.95 at Cromwell's Madhouse in Ipswich in 2001. After a fascinating survey which led from Ipswich (UK) to Ras Jebel (Tunisia) and Saklo Agoume (Benin), the reporters identified that a minimum number of 13 states had contributed to the production of the cloth sold in Ipswich and thus to the elementary flows or connections between firms in these countries. The reporters estimated that, “At a very rough, very conservative estimate, [this pair of LC10s has undergone] a journey of about 40,000 miles3 on which components and raw materials criss-cross the globe in a sort of jerky, deranged dance”. This example is a perfect illustration of the idea that the world is becoming increasingly complex and thus that it cannot simply be analysed in a spatial framework restricted to European Union. In the production chain of the LC10s, 6 states in the ESPON area are included (France, the UK, Germany, Hungary, Italy, and Spain) although the main task of production is carried out in a neighbouring country (Tunisia) with important inputs also emanating from countries located all around the rest of the world (Turkey, Benin, Namibia, Pakistan, Australia, Japan, …). As such, when European policymakers come to take a decision on a subject like the complete liberalisation of the international trade in textiles and clothing, they should be aware that the consequences are not only sectoral and economic but also geographical. This geographical consequence has to be evaluated in different territorial frameworks (inside the EU, in the functional ESPON neighbourhood, and in the rest of the world) and at different scales (national, regional, local). This then is an exceptional opportunity for the ESPON programme to demonstrate that space does matter and that sectoral problems (trade, research, the internal market …) are not independent and should thus be analysed in their territorial dimension according to a systemic approach at different scales.

2 “Story of the blues”, F. Abrams & J. Astill, The Guardian, Tuesday May 29, 2001 3 About 65 000 kilometres.

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Globalisation is not only a purely economic process characterised by the increasing mobility of capital in a borderless abstract space. It is also a strong social and territorial reality which can be illustrated, in the European case, by the increasing number of migrants who try to gain access to the European Fortress and die trying. According to official registration returns, P. Rekacewicz and O. Clochard have established that a minimum number of 4000 people died during the last ten years while trying to gain access to Schengen territory (Figure 3). This is however a minimum estimation and in reality the real figure is probably much higher …

Figure 3 : More than 4000 deaths in 10 years at the borders of EU

Source : P. Rekacewicz & O. Clochard, Le Monde Diplomatique, Mars 2003 According to Cat Steven’s song, we are leaving in a ‘wild world’ where European policymakers often act as if Europe is increasingly less able to influence the events taking place around them. The common feeling of “European decline” reinforces the idea that after the golden age of the 19th century, our old continent is no longer able to propose any relevant vision of the future to others. There is then a palpable temptation to ignore what is happening outside and to close our minds to the world beyond. This is indeed what was done at the beginning of ESPON programme when the cartographic template of an area of interest limited to 29 countries was elaborated completely ignoring the fact that

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contemporary spatial dynamics cannot be correctly analysed in such a limited territorial framework (map 7). The preliminary study of Europe in the World launched in the framework of the cross-thematic project ESPON 3.1 played a crucial role in the evolution of minds, when it proposed a new cartographic template at world scale which intentionally avoided placing Europe at the centre (map 8). As stated by C. Grasland and C. Grataloup: “The right planisphere does not exist. The transformation from sphere to plane implies necessarily a deformation of areas and/or angles and/or global shapes. Furthermore, a map of the World can get no satisfaction because the global world is economically organised as a ring around the earth when a map is a plane representation with edges defining a single centre. The more traditional projections (e.g. Hammer Aïtoff, or Mercator), directed toward the north and centred on Europe, express rather well the world‘s organisation of the XIXth century when the Old Continent ruled the other regions of the Earth. But today we live in a polycentric world. And pictures which try to provide evidences of multiple centralities and competitive influence areas should not induce biases related to false polarisation introduced by the choice of map projections. This is the reason why we proposed to ESPON to choose a polar projection, setting the Northern Hemisphere at the centre, simply because it is the place where 90% of the human beings live. Such a map can easily be revolved in order to emphasize the various centralities. Finally, it appears useful to keep the continuity of the earth surface, avoiding aphylactic maps where continents are floating in an unspecified mixture of ocean and “nothing”. In the ESPON context, it is important to bring to the fore a map projection which gives the opportunity of a polycentric, but also universal, representation. Of course, the Southern Hemisphere is badly treated (the disappearance of Antarctica), which proves that any planisphere introduces an implicit subjectivity. But, when looking at the maps in the second part of this report, we can verify that not only rich people but also the majority of the world’s poor are fairly represented with this map projection. Finally, none of the world economic centres are advantaged, as the user of such a map can rotate it in any direction. This implicit message is essential for the analysis of a polycentric Europe in a polycentric world.” ESPON 3.1, July 2003, Third Interim Report, Annex B: “Europe in the World”, p. 7

This preliminary study was an important milestone on the way to producing a new vision of ‘ESPON in the world’ though it alone was not sufficient to change traditionally ingrained ways of thinking. Until the decision was made by the ESPON Monitoring Committee to launch project 3.4.1 “Europe in the World” in 2005, the cartographic production of ESPON remained clearly limited to the traditional template of ESPON 29. What was missing was not only technical tools (such as a database elaborated at world scale) but also clear understanding, on behalf of both researchers and policymakers, of the need for ESPON to produce a collective vision of the situation of ‘Europe in the World’ in addition to the continuing lack of an intermediary level between ESPON and the rest of the World, which was suggested but not achieved in the preliminary study realised by ESPON Project 3.1.

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Map 7 : cartographic templates for ESPON

Map 8 : cartographic template for the World

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2.2 Which vision of Europe in the World?

How many times must a man look up Before he can see the sky? Yes, 'n' how many ears must one man have Before he can hear people cry? Yes, 'n' how many deaths will it take till he knows That too many people have died? The answer, my friend, is blowin' in the wind, The answer is blowin' in the wind. Bob Dylan, Songs.

The collective mental representation of societies does not follow the same rules as that of scientific knowledge. Scientific knowledge is a social product constructed in a precise spatial and historical environment. Scientific activity always maintains a critical view avoiding facile conclusions. Collective representations, on the other hand, appear as natural facts with clear limits and eternal validity. A factor of identity as powerful as “Europe” is therefore necessary related to strong mental representations which cannot be easily modified. The boundaries of the so-called “continent” of Europe determined therefore the other divisions of the World. They are considered as secondary when compared to the main opposition between Europe and the rest of the World. As with the prisoners of the Cave in Plato’s allegory, we are unable to produce any relevant visions of the situation of Europe in the World as long as we remain unable to walk out of its limits. Moreover, the situation is further complicated by the fact that we ignore the interminable question of the delimitation of the borders of Europe. It is not a paradox to suggest that, among the different institutions in charge of policymaking at the European and national levels, DG Regio and the ministers of spatial planning should be seen as those most likely to support a renewal of the vision of Europe in the World. This is so precisely because they are not in charge of external relations (as in DG Trade, DG Relex and the related national foreign and external trade offices). Working mostly at the local and regional level, spatial planners are particularly interested in the question of territorial division while not ignoring the fact that many solutions can be provided in relation to the establishment of various regional typologies based on flows, similarities, accessibility, and networks etc. They are also acutely aware of the effect of globalisation at the local scale. “Thinking globally and acting locally” is second nature to spatial planners, something that is not necessarily the case for other researchers and policymakers who are often rather oriented to sectional approaches and thus do not share this particular sense of space and scales. It is therefore not by chance that a project called “Europe in the World” was launched precisely in the framework of an ESPON programme supported by DG Regio and the ministers in charge of spatial planning. The beginning of the 21st

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century is an historical moment where all of our traditionally accepted representations of the World appear to be in crisis. To support this point, let us briefly recall the various dominant models of representation of the World that are actually currently available, each of which provides only partial evidence of the reality of the contemporary World4. 2.2.1 Centre/Periphery: the Triad and its region The development of a World trade space does not mean a dilution of economic hubs indeed, quite the opposite. While manufacturing activities are affected by relocation this is not generally the case for the core business activities (the stock exchange, management of large firms, high level research etc) all of which remain concentrated in few central places. These core activities are embedded in three major urban areas, three megalopolises. The most important, and the one for which the word itself was coined5, is still the North-Eastern United States. The European axis, from Milan to London is the older, while the urban area of southern Japan has, for the last thirty years or so, been the third centre. This ‘triple core’ is often called the “Triad”, and it is continuously recomposing itself, both concerning the internal structure of each of its parts (with for example the development of Shanghai in East Asia) and in relation to the continuing competition between them. However, at a global scale, the stability of the “World-cities” is striking as compared to the flexibility of the shapes and localisations of common production activities. The stability of the World economic core can be explained by means of the rarity of the activities and tasks undertaken here but also by the systemic cohesion of the whole that allows for a certain level of continuity. In essence, the triad operates around three eight-hour shifts, while on the global stock exchange the sun never sets; when a stock market closes in Europe another opens in the far east. As a testimony to this interdependence the major global economic flows take place between those three centres. Peripheries are organised around those major centres. Other big cities and/or high level industrial centres, with areas of intensive agricultural production are often located in close proximity. A high density of tourist spaces has developed to the South of each centre (Caribbean, Mediterranean Sea, and South China Sea). These centres influence the structure of the margins (Central America, the Maghreb, and South East Asia), which are subject to migratory flows while also becoming spaces for the relocation of production and service activities. This first attempt to interpret the nature of the emerging global space associates a ring of three centres, each one organizing a southern space, a zone innervated by major

4 The following sections are the English translation of a work from C. Grataloup to be published in 2006 in a “Dictionary of Globalisation”. 5 Gottman, J., 1961, Megalopolis - MIT Press -

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migratory flows. This image is not however, of itself, sufficient to provide a complete view of reality. 2.2.2 The north-south opposition: still not obsolete? We can of course begin from the opposite viewpoint from that which has been sketched out above. All of the dominated peripheries, where the development indicator per capita is usually weak, are spaces located to the south of rich regions. The use of the expression North/South is however an unsuitable language habit, because the more southern spaces are not always the poorest. The expression “Little triad” is sometime used to refer to the spaces counterbalancing the northern centres: Australia and New Zealand, South Africa, Latin America (Grasland C., Madelin M., 2001). As economic expressions such as‘ underdeveloped countries’ or political ones like, ‘Third-World’ are generally seen to belong to a bygone era, the use of cardinal points seems instead to be more apposite. This approach also has the added advantage of avoiding deterministic expressions, or opposing temperate and tropical regions in an unhelpful manner. It is difficult, today, to consider the developing countries as a homogeneous whole, as perhaps was the case in the 1960’s and 1970’s. It remains impossible however to ignore the importance of the living standards gap between countries. Indeed, the clear lines that were formerly drawn on the maps, following the shape of the Rio Grande, the Mediterranean Sea and the Amur River are now replaced by non continuous gradients from post-industrial countries to less advanced countries. Indeed, the social gap within each country can now often be more important than that between national averages. This is not to say however that social differences between societies have disappeared. The North-South vision of the World, even if changed in gradients, is thus still meaningful. The politically organised and motivated ‘Third-World block’ at its height in the 1950’s and 1960’s subsequently disintegrated, shedding members from both its richest and poorest groups. On one hand, countries considered underdeveloped fifty years ago, such as South Korea, eventually joined the OEDC (1996), with other so-called ‘emerging’ countries likely to follow the same path. On the other hand, less advanced countries, mostly from sub-Saharan Africa are increasingly mired in civil conflict or facing unmanageable social health care problems and as a result are slowly sinking into disorganisation. In addition, former members of the soviet block are now scattered between the rich (Baltic countries), intermediate (Russia), emerging (Vietnam), and poor (Cuba). If a binary view of the World is only relevant for caricatures confronting two “hemispheres”, the gap

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between a World composed of rich people and large (and densely populated) territories of poverty is still a topical subject, and doubtless will be for some time to come. On the other hand, the political aspect of such classifications is becoming less and less meaningful. During the Bandung Conference (1955), in the middle of the decolonisation period, the link between underdevelopment and colonial inheritance seemed obvious. When trying to set up the ‘third’ block of non-aligned countries, distinct from the blocks of the cold war, Third World leaders attempted to invert the ‘inheritance’ of imperialism on its head. At the beginning of the 21st century however, these basic configurations have changed. That does not mean however that a geopolitical interpretation is no longer accurate, indeed, it may be more accurate than ever. 2.2.3 Permanent features and geopolitical changes In line with this north-south polarisation, the east-west conflict highlighted the major division of the World during the cold war. The Iron Curtain (or bamboo one) reminded us of this major opposition between two competing projects or worldviews socialism and capitalism. No school book could give a presentation of Europe or of the World without a picture of the Berlin Wall. If, since 1991, there remain a few countries, such as China and Vietnam, which still claim, discretely, to be socialist, they now often add the epithet “market” to their self-descriptions, while in North Korea the reference to communism is used only to underline the regime’s opposition to the rest of the World. Concerning the continuing survival of the Castroist regime in Cuba, its duration is now surely only due to the US embargo. The time of firm great alliances, sealed by fear, is over. NATO remains active only at the price of becoming the World’s policeman, intermediary between the unilateral force of the United States and blue helmets of the UN. Moreover, no formerly privileged link is safe from a simple electoral shift. Even the ‘special relationship’ between the United Kingdom and the United States is increasingly being questioned, while Russia has difficulty in maintaining influence in its so-called “near abroad”. And yet the nuclear arsenals are still there. Their modernisation is even expected, with a growing number of states trying to join the nuclear club. Indeed, the victors of the Cold War face increasing difficulty in constraining a group of large and medium-sized powers whose geo-strategic games organize the international scene according to “realpolitik” in which ideology and rhetoric are increasingly inseparable, while the search for economic advantage remains the name of the game. It is in this context also that a new China is emerging to regain its world power role.

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One could be tempted to see this geopolitical game through the prism of ‘clashing civilisations’ outlined by Huntington6 a phenomenon which appeared to be re-emerging again at the end of the twentieth century. This effort in reductionism however conveniently forgot that global politics remains a matter of States: the state division is still the only structure that clearly divides the World, while the interrelations between states continue to embody the international level, contributing to what is a contradictory process and at the same time remaining an essential part of the global order. Because it is an association of states, the UN embodied what, at the international level, slows down or speeds up the reinforcement of World societal level. On one hand a decision can be blocked if a majority of countries on the Security Council or, simply, one of the Security Council’s five ‘permanent’ members votes it down. On the other hand, most global questions are discussed, and even, sometimes resolved. Meanwhile, many UN agencies or parallel organisations have attained a level of autonomy that allows them to act as global actors. 2.2.4 The dialogue between civilisations At the beginning of the 1990’s, missing the clear organising structure of cardinal points, it became fashionable again to use the major divisional criteria provided by the notion of competing civilisations initially formulated in the Eighteen century.7 This secular vision of the World is itself inherited from a classification of people according to religion. So, the civilisational criterion is often used to turn Islam into the adversary of western, capitalist globalisation. Even if this new binary vision is too simple, (although it is not completely unfounded), the geography of civilisation is very long-lasting. One cannot simply ignore it, as long as there is no confusion between civilisation and religion. [Seems more polemical than scientific….?] The idea of “great” civilisations however echoes the simplistic ‘evolutionary biological’ worldview of the nineteen century. But size is often not the predominant factor. Indeed, there have been, and still are, societies composed of a small number of people with very particular identity elements. One can even observe that under globalisation, the state level can be challenged allowing indigenous peoples to reconstruct their identities, with, perhaps, the Chiapas Indians of Southern Mexico being a case in point here. [Claude, this whole paragraph was rather difficult to ‘translate’, and at the end of it I’m still not sure whether (a) I understood it correctly, or (b) even if I did, whether it actually adds anything to the argument.]

6 See Samuel P Huntington, ‘The Clash of Civilisations’ Foreign Affairs Vol.72(3) 1993. 7 This debate does however have much older roots, going back to the beginnings of geography with Herodotus and Pliny, from the rather open ethnography of the former to the ‘us-them’ dichotomies of the latter. In a modern context Edward Said’s discussion of ‘Orientalism’ is quite apposite here. See, Orientalism Vintage, New York (1979).

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There is another trap that must be avoided, namely considering the map to be fixed. Civilisations exist only through the men and women that live in them, transform them and transmit them. The present wave of globalisation did not invent inter-breeding, though it does increase it. For three centuries western thought has sought to engender an opposition between civilisations in the plural, by means of the tool of the hierarchical classification of humankind. While the notion of ‘civilised’, in the singular, or the most advanced way of life (that obviously they applied to themselves). Today however a global multi-scalar civilisation can be sketched. Without this, the confrontation between civilisations becomes only a mask for the game of geopolitics. 2.2.5 And still for lack of anything better, the continents Sometimes, it is difficult today not to reminisce about the Cold War era when the potential for War and the political emergence of the ‘Third World’ allowed us to divide the World in a pedagogical way. This simplicity was however always a delusion, an obstacle to perceiving the dynamics that were producing our current World (end of the soviet model, emergence of new industrialised countries, fundamentalist reactions...). Perhaps the fact that western and eastern points of view shared a common ‘evolutionist’ origin, both thinking themselves to be the source of progress, produced a classification that was more temporal than spatial where the World was divided between backward looking (pro-slavery, feudal and underdeveloped states), intermediate (developing, capitalist) advanced (developed countries, liberal or socialist governments). It was however the “development school” that formalised the couplet “centre-periphery” as a view of the World, and first proposed a synchronic vision of classifications (development, underdevelopment). Today the thoughts on the World follow a different stream of historicity for which great historical visions are however suspicious. Focusing on the present, they advantage synchronic divisions that are basically spatial. If however one decides to reject the civilisation view of the World too, the only remaining approach is to classify according to natural, or supposedly “natural”, divisions. A relevant anecdote here is the new museum in Paris which will replace the “Musée de l’Homme”. The latter opened in 1937 and was totally organised around the evolutionist point of view, from prehistoric times to the native peoples of the ethnographer classified as hunter-gatherers, farmers, or pastoral. Today this point of view is both politically unfashionable and scientifically unsustainable. No agreement could however be reached on how to classify the new collection, which will therefore be arranged in four sections: Africa, America, Asia and Oceania. Moreover, no agreement could even be reached on the name of the new institution, simply now named the “Musée du Quai Branly”. This

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illustrates that there is now a basic mistrust of once respected hierarchies between peoples thus explaining the desire for neutral categories. Of course the absence of ‘Europe’ here is not accidental!! Are the continents then really such a neutral way of dividing the World? The most basic definition of a continent is “large area of emerged land” as opposed to islands and archipelagos that are separated by sea and oceans. In some cases the notion of contiguity is added to define a continent. Five continents are usually distinguished (Europe, Asia, Africa, America, and Oceania) though on occasion seven continents are cited with the Americas divided into two and Antarctic added. Let us then have a look at a so-called objective document: the map of the tectonic plates (figure 4).

Figure 4 : Tectonic plates

Source: http://pubs.usgs.gov/publications/text/slabs.html (U.S. Geological Survey website) As the above map illustrates, Europe cannot really be considered, from a geological point of view at least, to be a continent but should instead be viewed as the western extremity of the Eurasian Plate. The continent of Asia, as it is generally understood, is divided between an Arabian Plate, an Indian Plate, a Eurasian Plate and even a North American Plate. America is not a continent either in this sense, being instead divided between a North American Plate, a South American Plate, and a small quasi-oceanic Caribbean Plate. Last but not

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least, both the usual definition of a continent and the tectonic plate map allow us to observe that the Antarctic is a continent, though it is usually forgotten, perhaps because we consider only populated areas as continents, suggesting that the notion of ‘continent’ is actually rather more a ‘social’ than a simple ‘physical’ construct. The concept of continent seems then to be rather weak particularly in relation to the realities of physical geography. It is thus simply illusory to pretend that the continents as we know them are natural facts, and not simply projections on the World map of the European vision of the world inherited from the medieval era (Orbis Terrarum Maps). This division of the World was constructed in the main from a Christian point of view, where the World is unified, surrounded by an ocean and divided in three parts, Europe, Asia and Africa, a view itself inherited from the Myth of the son of Noah. Objectively, only the Americas are an autonomous whole as proximity had effects. Nevertheless, it is clear that the delimitations between Asia, Europe and Africa are a by-product of an arbitrary decision within one particular civilisation. In respect of Oceania, its name alone seems to undercut its continental status.

Figure 5 : Olympic rings

The Olympic Rings logo (figure 5) provides yet another example of the cultural and civilisation perception of the continents. The Olympic rings are the symbol used on the legal flag of the Olympic Games, proposed by Pierre de Coubertin, in 1914. They are known all over the World and they are a symbol of the universality of the Games. The flag itself is made up of five rings each representing one of the “five parts of the World” as M. de Coubertin said or the “five continents” as almost everybody says8, namely, Africa, America, Asia, Europe and Oceania. It is often said that the Blue colour is for Europe, the Yellow for Asia, Black for Africa, Green for Oceania and Red for America. The White colour of the background then represents the notion of “Peace”. In fact, in the conception of

8 Including the International Olympic Committee (http://www.olympic.org/)

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M. de Coubertin, the colours do not symbolised the continents at all. The six colours are those usually used in the national flags of the countries of the World. Moreover, we could also observe that, in respect of this erroneous interpretation, three of the rings are assigned to continents according to the usual denomination of skin colour. The yellow colour is also the one of the Chinese Emperor. Blue should be logically used for Oceania, but is used for Europe perhaps because the colour blue is the one that a majority of European people prefer, or because more recently the predominant colour of the European flag has become blue (from a European religious point of view blue is also the colour signifying the Virgin Mary). As such then green is used for Oceania because is it the only colour remaining. As such then, the Olympic rings propose a division of the World into five parts, five continents that could perhaps be seem as objective. The commonly perceived symbol of the rings’ colour is however, on closer inspection, a kind of cultural projection of the division based on a perceived division of humankind according to skin colour. 2.2.6 Conclusion Globalisation accelerated rapidly when the barriers and frontiers that divided the World between 1914 and 1989 came tumbling down. This reassertion of the ‘global’ moreover, made it difficult to continue to perceive the division of the World into subsets, while the simple self/other dichotomies of the Cold War era were increasingly at odds with a need to reconsider the issue of regional diversity. After the collapse of the East/West and South/North organisational couplet however, we now have a single vision of the World, though this currently remains wedded to the notions of either civilisations or nature. To take into account all of these individual dimensions thus became increasingly difficult: the pattern of economic regionalisation does not readily equate to the historical civilisation areas, or to the usual continental conventions. The vocabulary is becoming more and more dubious; what then does the term “Asia” now mean? Increasingly, in both statistical tables or in the newspapers, the “Middle East” (from a European point of view) is not in Asia, though, on occasion, Australia is (not absurd when considering economic regionalisation and Triad zones). But what is not surprising from an economic point of view would become shocking in a cultural context (if, for example one was, for example, to view Australia as being Eastern). What is at stake here then is the need to ‘think of’ or to ‘classify’ the World and its regions in a more complex way, at least taking into account a multitude of criteria at the same time. If the global level is to have some meaning, then it

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must be seen to logically produce a differentiated space. It is inherited from multiple diversities, it smoothes them or uses them, but it also produces differentiations in an economic, cultural and political sense. Thinking about parts of the World cannot then be done without thinking about the world as a whole, that is to say, all of its social aspects and all of its places simultaneously. What a great work that would be! Fortunately for us the World is not so simple.

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2.3. Ambitions and limits of the project ESPON 341

O wonder ! How many goodly creatures are there here ! How beauteous mankind is ! O brave new World That has such people in ’t ! W. Shakespeare (1612), The Tempest, V.1

With limited resources which were, for example, half of that allocated at the same time to other new ESPON project launched in 2005, we were immediately aware that we would be unable to cover everything. We therefore decided to focus firstly on the elaboration of long -term integrated analysis tools which could provide a solid basis for those who will follow us in researching this field. In this spirit, we elaborated new map templates, new databases, new hierarchical divisions of the World, and a new dictionary of concepts. We consider these “technical results” to be a major achievement because they are not in fact based solely on technical considerations alone but actually benefit from all of the research conducted by the TPG as a whole. Moreover, they are specifically oriented toward the needs of European policymakers while providing the source for what we hope, will be a deep renewal of the European vision of the World. The elaboration of the set of integrated tools presented in volume II of this final report would not have however been possible without an in-depth analysis of the more theoretical questions that we decided to organise around four key questions presented here in volume I. Our approach in this volume was, where possible, to combine global statistical analysis based on exhaustive databases available at World scale (the detailed results of which are presented in volume II) with selected case studies designed to ensure an in-depth analysis of specific fields (volume III). Our choice for this volume I was to produce a relatively short synthesis, easy to read and illustrated by many original maps, tables and figures which are, on occasion, not comprehensively explained in full methodological or epistemological detail here, thus keeping the text for volume I at a manageable length. As such then, the reader is free to continue their analysis and, ultimately, to draw their own conclusions by referring to the subsequent volumes of the report. Clearly, the field of investigation was very wide, as such, it was necessary to have clear targets strongly related to the expectations of the ESPON Programme. Our analysis of the terms of reference and our knowledge of the existing results of the ESPON programme led us to the conclusion that the most important challenge for the TPG of project 3.4.1 was the introduction of the 4th dimension (the World) into the actual framework of the 3-level approach which has been

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the main output of previous ESPON research. More precisely, the introduction of this 4th dimension meant that we had to propose a joint analysis of the influence of Europe on the rest of the World (“Europe in the World”) and of the reciprocal influence of the World on the internal differentiation of European territory (“The World in Europe”). At the same time however we did ignore the issue of what “Europe” was. As such, we felt that it was logical to use ESPON 29 as a definitional starting point for a territorial delimitation of the area of interest. In a sense, the correct title of the project should be “ESPON in the World, the World in ESPON”. Following on from these central objectives, we have identified four key-questions which attempt to examine this interaction between ESPON and the World at different geographical scales.

♦ The division of the World into regions (Part A) tries firstly to

propose divisions of the World according to four groups of criteria which are mental representation (how firms, associations, governments etc usually divide the world), accessibility (morphologic distribution of land, population and wealth), homogeneity (structural division of the World according to levels of economic and social development) and interactions (functional organisation of flows in the World). We derive from this analysis a synthetic tool, the WUTS system, which proposes a hierarchy of division of the World into regions of different size. The application of this WUTS system is demonstrated through a short benchmarking exercise between ESPON 29 and the other global integration zones.

♦ The delimitation of the ESPON influence area in terms of its

functional neighbourhood and networks (part B) suggests a global-medium scale approach which attempts to answer the question of the delineation of a functional area of countries more related to ESPON than to other parts of the World. Three types of flows are examined (trade, air, migration) in order to fulfil this objective. Questions are also asked concerning the morphology of this influence area. In the case of air flows, the idea of “area” appears to be not that relevant and thus instead we propose to speak of a “network of relation” which does not fulfil the condition of territorial continuity. In the final synthesis, we keep this duality of approach and propose (1) a view of European influence based on a synthetic quantitative criterion and (2) a typology of relational networks of Europe in the World. This typology define four strategic types: integration, responsibility, opportunity and challenge. The conclusion focuses on the possible contributions of ESPON 29 to the Millennium Objectives in relation to their application at world scale.

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♦ The analysis of ESPON’s functional neighbourhood (part C) is a medium-local scale approach which focuses on the analysis on the area which has been recognised, in part B above, as that which is, or can be, most integrated with, or into, ESPON territory. Special focus is placed here on border regions which are analysed in detailed by means of a number of case studies. We do not however limit the analysis to the land borders of the eastern side of ESPON, we also examine, in detail, the dynamics of those states located on the southern shore of Mediterranean Sea. The issue at stake here is the problem of the elaboration of a global Euro-African region linking the economic core of Western Europe with its eastern and southern peripheries. The states of the ESPON territory has a crucial choice to make then between remaining an integrated area based on homogeneity (“convergence regionalism”) and building a more ambitious entity with the southern and eastern Mediterranean countries (“North-South regionalism”). Our analysis supports the idea that the second option is probably more interesting for the ESPON territory from a strategic perspective and could be a major factor in the success of the Lisbon Strategy as it is currently conceived.

♦ The analysis of the internal differentiation of the ESPON

territory according to globalisation (Part D) is a local scale approach when we take the World as our reference point. We try here to measure the strengths and weaknesses of European regions and cities in respect of the threats and opportunities afforded by globalisation. We focus in the main on the effect of regional economic structures which fundamentally determine the degree of opportunity or threat that is induced by globalisation. We also attempt to clarify the definition of the potential gateway cities able to connect to ESPON territory at different scales (World, ESPON-Neighbourhood, intra-ESPON etc). Our conclusion’s focus on the importance of producing new indexes introducing this ‘world dimension’ for the better evaluation of ESDP objectives and the goal of territorial cohesion.

♦ The very difficult question of the boundaries of Europe which

was mentioned in the terms of reference is finessed throughout the main body of the report and it is only in the Conclusion that some insights are given on this complicated subject.

The scientific coordinators of this project9 want finally to underline the pleasure that they had during the preceding 18 months working with a “dream team” of very motivated researchers. Indeed, this is something that has been absolutely

9 Claude Grasland (UMR Géographie-cités) and Clarisse Didelon (UMS RIATE).

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invaluable to the success of this collective project. Thanks also go to the ESPON Coordination Unit and in particular to P. Mehlbye, S. di Biaggio and S. Ferrara for their constant encouragement and support in the realisation of this study. We simply hope that the reader will display the same level of enthusiasm, displayed by the team in the elaboration of this difficult piece of research, with the final output.

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3. PART A: DELIMITATION OF WORLD REGIONS 3.1. Introduction 3.1.1 Options for World Regionalisation The division of the World into 150 to 200 states is a political reality which defines a system of ‘international relations’ where each state, whatever its size, theoretically displays full sovereignty, and is therefore considered to be equal in terms of being the bearer of rights, to all others. This is obviously a fiction because, in terms of World power, some states are clearly “more equal than the others10” and, as such, it does not really make sense to compare the population of China and Luxembourg or the GDP of U.S.A. and Djibouti. It is also true that many authors consider the framework of international relations (state-to-state) to no longer be an accurate way of analysing the World and propose instead that we focus on supranational relations (e.g. more or less integrated regional organisation like EU – political and economical - or NAFTA – purely economical) or transnational relations (e.g. network of international global cities). But whatever the international economic and political reality of this so-called “decline of the state”, it is important to underline the fact that the state level actually remains an important factor in research on the divisions of the World because the majority of the statistical information covering the World continues to be produced at the state level. The “monopoly of the legitimate collection and use of statistical information within a given territory” 11 remains a fundamental attribute of state sovereignty in the 21th century and we are therefore generally more or less obliged to use the puzzle of states as a building block in any attempt to understand the division of the World based on economic or social criteria. The heterogeneity of the size of World states in terms of area, population or GDP is a real problem for the realisation of a study on Europe in the World, comparable to the problems encountered in other ESPON projects with, for example, the use of NUTS2 and NUTS3 (ESPON 3.4.3 MAUP). We have thus tried to limit this problem by selecting only 168 states and eliminating the micro-states (ESPON 3.4.1 FIR). It nevertheless remained obvious that our capacity to analyse the World’s dynamics continued to be dramatically hampered by this basic heterogeneity in the nature of the national building blocks of the states system.

10 G. Orwell, Animal Farm 11 This is by way of complement to M. Weber’s definition of the state as "a human community that (successfully) claims the monopoly of the legitimate use of physical force within a given territory."

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This is the reason why we decided to establish a hierarchical system of divisions of the World starting from the state level but attempting to propose different levels of territorial aggregation which were thought to be more relevant. The elaboration of this hierarchical system of aggregation of World units is based on various criteria presented in the following sections. 3.1.2 Definition of regions In geographical terms a “region” can be defined in a general sense as “first significant level of spatial organisation under the global level of reference under investigation”. This definition has the benefit of being easy to understand in the case of national contexts where the word “region” is widely used for the description of infra-national territorial divisions, which themselves can be based on various criteria such as administrative and electoral (e.g. Länder in Germany), homogeneity for selected criteria (e.g. agricultural or economic regions), the organisation of flows (water basins, functional areas), etc. But these infra-national divisions are generally organised in a hierarchical way with various levels of territorial division and, as such, it is important to bear in mind that, in the narrow sense that will be used here, the word “regions” should be limited only to the first significant level of territorial division or spatial organisation under the reference territory. Smaller divisions will be considered as sub-regions or regions of a different level defined in a recursive manner. According to the previous definition, the transposition of the concept of region at the World level means that the delineation of a World region is an attempt to define the first significant level of division of the World under the global level of mankind living on the surface of our planet. Dividing the World as such then is not the same as dividing the Earth. · The Earth is a physical and biological system which can be described and divided in many ways according to various criteria (climate, land use, vegetation etc) where the influence of human activity is only one parameter among others. The definition of Earth regions would thus lead to an interesting but complicated and rather technical debate on the so-called “natural” divisions of the planet. · The World, on the other hand, is a social system defined by the extension of mankind i.e. by the location of 6.5 billion human beings. Of course, people do not live in space and are, as such, localised to the surface of the earth where they work, love, create etc. This notion of location is not however the full determinant of human activity as people migrate, exchange goods and ideas, fight, and develop material and spiritual links. Dividing the World is thus a rather different task than that of dividing the Earth and can certainly not be based on “natural” criteria but only on social facts.

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This distinction between Earth and World does not mean that factors like the distribution of climate or the repartition of lands and oceans has not to be taken into account in the proposals of World division. Rather, it is that these factors will always be considered in their relation to human life and human activity and not as external independent factors. Moreover, all of the “social” or “natural” criteria that could be used in the attempt to divide up the World should likewise also be interpreted in their material, functional and spiritual dimensions. World divisions are not revealed but are instead produced. They are social forms, in Simmel’s (1908) sense, which means that they should be considered as societal tools built in a given societal context in order to fulfil societal objectives. 3.1.3 Which method of regionalisation? Theoretically speaking, there are two broad approaches to the elaboration of the synthetic division of the World into regions: · The thematic approach begins from an examination of criteria according to the usual scientific delimitations (social, economic, demographic, environmental, historical etc) examining inside each field of knowledge the spatial organisation of the World in order to propose synthetic maps in each field. Doing this, we would propose successive synthetic maps presenting the World’s economic regions, World historical regions, and the World’s environmental regions, etc. · The conceptual approach on the other hand begins from the study of abstract criteria which can be used in the elaboration of regions (similarity, network, belonging, contiguity, flows etc) without addressing a priori a particular content. The same thematic criteria, for example demography, can therefore be used in different ways: age structure will be used for the elaboration of homogeneous regions (criteria of similarity); international migration will be used for the elaboration of functional regions (criteria of flows and networks); laws or agreement restricting migration will be used for the elaboration of political regions like the Schengen treaty area. Both approaches inevitably have their advantages and disadvantages, though they are in fact complementary. The thematic approach is generally the starting point for any in-depth analysis of each the above ‘criteria’ by specialists in each specific research field. Moreover, it is only when this thematic approach is elaborated that the integrated cross-thematic analysis of the conceptual approach can be realised. In our final report, we have decided to present the thematic approach in volume II (where a deeper explanatory discussion is

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presented) and to restrict the discussion in volume I to the synthetic cross-thematic results, which favour the conceptual approach. In the following sections, we propose to compare four different approaches to the division of the World.

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Box 1 : Options for World Regionalisation

MENTAL REGION: Defined by observers using subjective criteria based on individual or collective representations. A typical example of mental regions is the division of the World into «Continents» which do not fulfil any objective criteria but are nevertheless very meaningful for our comprehension of the World. The fact that mental regions are based on subjective criteria does not mean that it is impossible to produce objective measures of these collective representations. POLITICAL REGIONS: Defined on the basis of treaty or other juridical criteria limiting the sovereignty of states participating in its construction, while agreeing to share certain areas of political decision-making. Various types of political regions can be defined according to the field of political action shared (economy, army, culture etc) and the degree of the transfer of sovereignty to the regional level. FUNCTIONAL REGIONS: Defined by an observer using one or more criteria relating to effective or potential flows (accessibility) which can be of very different types (people, money, information, goods, ) or measured in different ways. Functional regions are not necessarily associated with precise limits and can be organised by gradients (influence areas) or by specific networks. HOMOGENEOUS REGIONS: Defined by an observer using one or several criteria of similarity which can be of very different types but are generally related to structural situation of the basic territorial units (culture, religion, language, demography, economy, history, environment, ) and to their relative spatial proximity (e.g. constraint of contiguity). Homogeneous regions are different from typologies which do not introduce any constraint on spatial proximity or from continents which are purely based on spatial proximity and not necessary on similarity.

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3.2: In search of World Regions 3.2.1: A mental approach: the perception of World divisions Many different visions of the World co-exist simultaneously. For each type of observer, if not for each observer per se, each exists as a way of understanding the World and of organising it according to subjective criteria (Box 1). As such, the World does not have the same divisions or regions for each individual observer. It is however possible to produce an objective analysis of these collective representations and to propose a synthesis of mental regions in accordance with different kinds of collective actors. This is what we propose to do here. International Organisations, Countries, Non Governmental Organisations and global private firms are the main actors at the global level (EIW - SIR p89). They divide the World in order to administrate it, to locate their activities and to organize their relations with other countries / or groups of countries. None of those global actors have a monopoly on prescribing an official division of the World, not even the United Nations. Those actors often propose, on their websites or reports, a map or a picture of the World divided into regions. Those pictures are not necessarily their operational division of the World, but as they are exposed to public opinion, it has been assumed that such maps necessarily have some meaning for the actors involved, and as such at least function as symbols of their power at the World scale. The compilation and statistical analysis associated with (SIR, vol. 1, Key question 1), these maps allowed us to build synthetic representations of World regionalisation according to each type of actor studied, and to observe whether common representations exist. Two types of cartographic document are presented here. One focuses on the limits between world regions proposed by the actors and presents the stronger mental borders. The second type focuses on linkages and derives from the frequency of common belonging. It is a hierarchy of clusters which summarise the most frequent associations of states in wider World regions for each type of actor. Continents and geographical factors The maps of limits proposed by each actor clearly highlight two interesting phenomena. Firstly, none of the actors studied dared to divide a country into two in order to put them into different regions. This was not however the case with European researchers involved in the ESPON programme surveyed on their representations of the World. As such, this perhaps indicates that a very diplomatic – or pragmatic residual level of respect exists among global firms for

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‘national entities’. The second phenomenon, and the most important one for our analysis, is that, in most cases the limits subconsciously drawn when grouping countries follow those relating to the traditional political outlines of the continents. Stronger limits (maps 9 & 10) are located between two continents in the sea or ocean (limits crossing the Atlantic, Indian and Pacific oceans and even Red Sea between Africa and the Arabian Peninsula). Terrestrial limits are always thinner than maritime ones, except in the case where they are used to distinguish between two very different spaces from a cultural and development point of view. This trend using the traditional figure of the continents can also be seen in the average number of regions usually drawn by such actors, namely between 5 and 7, which clearly aligns with the usual number of continents in common opinion. The use of continents to draw World regions makes the divisions more consensual and more legitimate in respect of public opinion as such a division is not based on contestable criteria but on the so-called objective “facts" taught by geography. If however one cautiously observes the synthetic regions formed by the most frequent partitions (maps 11 to 15) one immediately notices that their size and composition are quite different for each kind of actor. For example, Europe, for German firms, stops at the Russian border. For International Organisations it goes to Vladivostok but, in some cases, excludes Turkey.12 This shows that the concept of continents is a dynamic one and that other criteria are used to produce World regions. Geographical discourse is not therefore a "hard fact" in this context. The so-called ‘neutral’ continental division of the World is in fact a socio-political construct representing and interpreting an aggregation of other criteria. Those other criteria used in the drawing up of World regions can be identified when observing the stronger terrestrial limits (maps 9 & 10) and the regions of medium and small size located between two large "continental" bodies. The stronger terrestrial limits are those for example between the Russian Federation and China, and North America and Mexico. A thinner limit can also be observed

12 The UN in particular is rather troublesome in this respect, as while many of its agencies place Turkey outside Europe, Turkish representation at the UN General Assembly, and on the Security Council relates to their membership of the WEOG, the West European grouping of states at the UN. Similar functional differentiation occurs in respect of other organisations, with Turkey being ‘in’ Europe as far as the International Telecommunications Union is concerned, but ‘outside’ for the International Postal Union! Generally, we can however say that, while a simple majority of the organisations surveyed place Turkey ‘outside’ the key organisations place Turkey firmly within Europe.

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between North African countries and Sub-Saharan ones. For each of these three limits a combination of cultural and economic factors (i.e. level of development) is clearly used.

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Map 9 : International organisations limits

Map 10 : Countries limits

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Cultural factors The cultural factor is particularly striking in the identification of a North African region. In most synthetic maps, Africa appears as a continent, without any further sub-division, even when the rest of the World is divided into smaller pieces. But for some of actors, some countries (France, the USA, China, Canada and the UK) as well as for many NGOs, a North African region clearly does exist, clearly following the spread of Islam as for all of them this North African region is conjoined with the Arabian Peninsula. Neither firms nor international organisations however dare to postulate the existence of such a region. The use of the cultural factor can be also be perceived in the appearance of small sub-regions, such as Southern India on USA’s map of the World, Central Asia in many International Organisations’ synthetic maps, but also in the fact that China considers Australia and North America as belonging to the same World region, whereas Australia is more often located as an Asian sub-region by all other actors. The question of cultural regions comes to the fore however when observing the maps dealing with limits. Some territories (Turkey, Sudan, Greenland) or groups of countries (Eastern Europe, the Caucasian states, Central Asia etc) are totally encircled by limits, indicating the existence of a certain level of uncertainty in respect of their possible allocations. Those areas of uncertainty are very often located between two (or more) cultural areas. The Central Asian countries are linked by recent history to the Russia Federation, though they are now also influenced, from a cultural point of view, to a greater or lesser extent by Iran and Turkey on the one hand, China (West) and Mongolia on the other. The possible examples here are numerous while they also underline a kind of ‘struggle of influence’ (Greenland between its administrative belonging to Denmark and its cultural and geographical proximity to Northern Canada) or an identity crisis (Turkey between its cultural link with Central Asia and its desire to belong to the European Union). Development level factor Other divisions of the World also exist, namely, those based on the perception of development levels. Such approaches are more often than not used in the context of sub-regions proposed by International organisations, which often mix geographical and developmental criteria to draw World regions. On one hand, they place the "industrialised developed countries" in the same group without considering distance and contiguity: North Africa, Japan, Western Europe, Australia and sometimes also other parts of World such as South Africa. While the rest of the World is not similarly divided according to development level,

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even if it is far from being uniform, and mainly according to the geographical criteria of proximity (South America, South Asia etc). Those representations of the World are not very visible on the maps proposed here as they are more often sub-levels of regionalisation.

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Map 11 German firms dividing the World

Map 12 : British firms dividing the World

Map 13 : French firms dividing the World

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Map 14 : Non Governmental Organisations dividing the World

Map 15 : International Organisations dividing the World

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Conclusion: A Eurocentric view of the World. The dominant criteria used, by the global actors studied here, to divide the World into regions is clearly the "continental" one. One should not however forget that this division was inherited from the European medieval vision (Orbis Terrarum Maps) (Cf. Introduction), where the World is unified and surrounded by ocean, and divided into three parts, namely, Europe, Asia and Africa. In our study this Eurocentric perception of the World is well illustrated by the significant difference in the regions’ sizes. The European region generally encompasses only a few countries gathering together only a small share of the World’s surface and population, but it is well identified. Asia, is more variable in size and of numbering more than twenties countries and including China and India, each with 1/6th or more of the World’s population. The following chapters of this volume aim to construct World regions using criteria other than the type of representation alluded to above to effectively supersede this traditional Eurocentric approach.

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Box 2 : The ESPON community’s vision of the World (Cf. FR – Vol. 3) The survey of the ESPON community took place in May 2005 during the ESPON seminar in Luxembourg. We asked more than 100 participants to divide the World into between 2 to 15 regions on a map. The main hypotheses was that the resulting maps should reveal things that people were not generally aware of and could reveal some relations between the individual attributes (nationality, age etc), the criteria used and the chosen limits and regions. The methodology used to analyse the results of the survey is detailed in volume III of this report. The most common division of the World shared by the participants of the survey was a division into 4 regions, where the first area to be clearly identified on the World map by the ESPON community is a large region formed by a large Europe plus the English (and French) speaking (but not Spanish speaking) parts of North America (blue & gray colours) showing a kind of cultural cluster. The fact that this space was identified first, confirms our perception that the World is indeed organised from our Eurocentric point of view. Southern America (brown), Africa (purple) and Asia (red to yellow), were subsequently identified though they were more often than not perceived as continents. The World in 15 regions shows large spaces such as Africa and Southern America, which are probably perceived as continental objects; while the lack of general knowledge about the internal differentiations of those spaces in Europe could explain this perception. Then we can observe medium spaces that have a strong cultural identity or at least that are perceived as such by the ESPON community: Europe, the China-Japan region, Central America and Middle East. Finally, one can observe smaller regions formed by one or two territories (Greenland, Turkey, the Caucasian states). Those small regions are mainly located between Europe and other regions, illustrating on the one hand the hesitations about their possible inclusion in Europe, and their role as transition areas between Europe and the rest of the World on the other.

Map 16 : ESPON community dividing the World

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3.2.2: The limits of the political division of the World The division of the World into continents is not an objective scientific reality but a social and historical production, a tool of power established by Europe and for Europe during its period of World domination. This realisation thus leads to the question: what would an objective definition of continents based on a scientific criterion of refutability entail?13 3.2.2.1. Potential of land area and “geographical continents” The word “continent” came from Latin terra continens which means continuous land and is usually defined as “any of the World’s main continuous expanses of land (Europe, Asia, Africa, North and South America, Australia, Antarctica)14”. In scientific terms, such a definition is clearly not sufficiently precise and cannot provide the basis for an objective delimitation of World regions based on the repartition of Land and Sea. The list of continents proposed by dictionaries or atlases cannot however be refuted by any experiment which means that we have moved beyond the field of science. Let us now consider then an alternative approach where what is measured is the potential of a land area located in a given spatial neighbourhood around each point of the earth’s surface. We have of course different solutions for choosing the neighbourhood’s function, once the parameters of this function have been defined. We believe, moreover, that it is possible to propose a mathematical objective measure of “continentality” associated with a cartographic representation of the main concentrations of land on the earth. We have chosen a Gaussian neighbourhood span 1000 km (map 17) with which we obtain a representation of the World in 5 to 6 concentrations of land more or less according to the common list but with an important difference: it is impossible to define any such area as Europe! According to the famous quotation of P. Valery “What is Europe? It is a kind of cap of the Old Continent, a western appendix of Asia”15. We also notice here that the limit between the so-called continents of Asia and Africa is not clear and that the Mediterranean Sea appears to be a kind of “Gulf” between Asia and Africa. The idea that Europe is a kind of ‘lost continent’ located somewhere between Asia and Africa fits very well with the Hellenistic Myth which localises the wedding of Jupiter and Europe to Crete:

13 For Popper, a theory is scientific only if it is refutable by a conceivable event. The existence of Europe as a continent is typically a proposal which cannot be scientifically demonstrated though different scientific experiments can be proposed in order to delineate objectively parts of the World. See K.R. Popper (1959). The Logic of Scientific Discovery. London: Hutchinson. 14 Definition taken from the Compact Oxford English Dictionary (http://www.askoxford.com). 15 Valery P., 1919, « La crise de l’esprit », reprinted in Valery P (1978), Variété 1 et 2, Gallimard, Paris, pp. 13-51.

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“Europa was the beautiful daughter of the Phoenician king of Tyre, Agenor. Overwhelmed

by love for Europa, Zeus, the king of the gods, transformed himself into the form of a

magnificent white bull and appeared in the sea shore where Europa was just having fun.

The great bull walked gently over to where Europa stood and knelt at her feet. His

movements were so gentle that Europa spread flowers about his neck and dared to climb

upon his back overcoming her natural fear of the great animal. But suddenly, the bull

rushed over the sea abducting Europa. Only then the bull revealed its true identity and

took Europa to the Mediterranean island of Crete. There, Zeus cast off the shape of the

white bull, and back into his human form, made Europa his lover beneath a simple

cypress tree.”16 As such then, while history seems unable to provide a definitive answer to the eternal question of - “What is Europe?” - the answers provided by geography may not be that palatable either.

Map 17 : Europe as “Lost Continent”

16 http://europaprojekt.ensign.de/

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3.2.2.2. Potential of population and “demographic continents” Having established that Europe certainly cannot be considered a “geographical continent” at World scale, we now propose to repeat the same type of analysis by considering the distribution of the World population in 1999. The analysis of the political distribution of World population by states (Map 18) indicates firstly the exceptional demographic size of China and India which account respectively for 21% and 16% of the World population. These two demographic giants are followed by a group of large states representing between 2 to 5% of World population: namely, the United States, Indonesia, Brazil, Nigeria, Russia, Japan, Pakistan, and Bangladesh. None of the 29 ESPON states belong to the top 10 of the most important states from a demographic point of view, and the ESPON territory itself appears as a concentration of small and medium-sized demographic units. The situation appears completely different however if we analyse the spatial distribution of World population in terms of borderless potential17. Given the present context of globalisation with the increasing mobility of people and capital, we assume that it makes sense to examine the distribution of population or wealth without referring to the political borders between states. As shown in map 18, World population is most densely concentrated in the two main regions of South Asia and South-Eastern Asia where the peaks of population potential in 1000 km reach 10 to 15% of World population. What is really new, as compared to the state distribution, is the fact that the third peak of population concentration in the World is clearly centred on the territory of the enlarged European Union with a maximum of 6% of World population located in a neighbourhood of 1000 km around Prague. The other peaks of population located in America, Africa and Oceania are clearly less important than the European one. Using the methods of mathematical morphology developed by Matheron & Serra18, it is possible to derive from the map of population potential a division of the World into regions corresponding to the “water basin” of each peak of population concentration. In the case of the peak of population located in Europe, the limits of the region clearly involve northern Africa, the Middle-East and Western Russia and define therefore a Euro-Mediterranean continent from a demographic point of view. This is the first important proof that, from a morphological point of view, the ESPON area is only the core of a wider World region. 17 We use the Gaussian neighbourhood span of 1000 km applied to the borderless UNEP grid of population, following the methodology explained in Grasland C., Madelin M., 2001, The unequal distribution of population and wealth in the World, Population & Sociétés, Mai 2001, n° 368, 18 Serra J., 1988, Image Analysis and Mathematical Morphology, London, Academic Press.

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Map 18 : Spatial and political distribution of World population in 1999

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3.2.2.3. Potential of GDP (pps) and “economic continents”

Following the same methodology as that used in previous sections, we propose now to examine the World distribution of economic resources from two points of view, from a political point of view, particularly as it relates to states) and from a borderless spatial point of view as it relates to potential. An important difference with previous analyses of this type19 is the choice to use GDP pps here instead of GNP in $ and to use more recent statistics (1999 instead of 1990). According to the political division of the World into states (map 19), the United States of America concentrates, in 1999, the most important share of the World economy according to the criteria of GDP pps (21.8%). They are followed by a second group of big states including China (10.7%), Japan (7.4%) and India (6.3%). But it is only in a third group of medium-sized states that Germany (4.7%), Italy (3.2%), the U.K. (3.1%) and France (3.1%) appear, followed by Brazil (2.8%) and Russia (2.2%). It is true that this classification of economic power would have been different with economic size measured by GNP in $ instead of GDP pps. But in every case the ESPON territory would appear a very fragmented area with national economies of smaller size than their chief competitors in the World. Interest in a borderless spatial vision of World economic poles is obvious in the case of ESPON member states (map 19) which are located in the neighbourhood of the greatest peak of economic concentration in the World. This map classically reveals the existence of 3 major economic poles in northern hemisphere (The “Great Triad”) and symmetrically three minor poles in southern hemisphere (the “Little Triad”), but it also makes visible the existence of an emerging 7th pole located in Southern Asia, in India. From an economic point of view, these 7 peaks of economic potential are associated with 7 economic regions polarised by economic cores. In the case of the ESPON area, the economic core is clearly located in the western part of the region (which was not the case in demographic terms) while the peripheries are organised in concentric circles to the south and east. Much of Africa (except those states located in the south), the majority of the Middle East and more than half of Russia and the former soviet republics are clearly involved in the potential economic influence area of what can be called the economic continent of Euro-Africa. We have however to carefully interpret these delimitations based on accessibility and potential because they define only the existence of opportunities for social and economic relations. We have now to verify whether these opportunities are really exploited by flows whether the economic and demographic continents

19 Grasland C., Madelin M., 2000, op. cit.

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revealed by this mathematical morphological approach are also functional realities.

Map 19 : Spatial and political distribution of World GDP (pps) in 1999

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3.2.3: Functional division of the World based on economic and demographic flows 3.2.3.1. Bilateral trade flows 1996-2000: a triadic organisation? The distribution of major international trade flows (bilateral) between the states of the World during the period 1996-2000 (map 20) does not exactly provide the expected picture of a “triangle” of major flows between each node of the Triad. The major international trade flows are indeed influenced by the political division of the World into states. Moreover the different parts of the “Triad” are not equivalent in terms of political fragmentation: one dominant economy in Northern America (USA), two dominant economies in Eastern Asia (Japan and China), at less four dominant economies in Western Europe (Germany, the UK, France, and Italy). As a consequence, this first map indicates the clear domination of the USA which is embedded in 6 out of the 10 major bilateral international trade flows and accounts for 16.0 % of World trade, followed by Germany (8.6%), China (8.5%), Japan (7.2%), the UK (5.1%) and France (5.0%). The important shares of World trade held by Western European states is partly an illusion however reflecting as it does, in the majority of cases, internal EU trade. The aggregation of EU25 into a single territorial unit provides a much better view of the organisation of trade flows at World scale (map 20). Despite the fact that the internal trade flows within EU have been removed, the share of World trade of the EU25 (17%) is now comparable to that of the USA (20%) which is advantaged by the fact that its ‘internal’ trade in the context of NAFTA has not been removed. The duality of Eastern Asia is now clearly visible and the aggregation of China, Japan (and South Korea) into a single unit would produce a perfect “triangle” linking together the three poles of the Triad. Each pole of the Triad has a clear influence on its neighbouring states. In the case of the EU, all of the southern Mediterranean countries are clearly embedded in the EU’s direct periphery. Russia is also clearly linked, even if is still strongly embedded in the former Soviet area.

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In terms of regionalisation, the World is clearly divided into three areas of influence, each composed of a major northern centre and a minor southern centre. The internal political structure of the major nodes is however somewhat different: showing a Monocentric structure in the case of Northern America (USA), a duo-centric one for Eastern Asia (China and Japan), and a polycentric one in the case of Euro-Mediterranean (Germany, U.K., Italy, France,).

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Map 20: Major bilateral trade flows between states of the World (1996-2000)

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3.2.3.2 Barriers and regional preferences in trade 1996-2000 The economic division of the World into three major areas polarised by the centres of the Triad is without doubt a major structure to be taken into account in our proposal of a hierarchical division of the World, and will thus be used as the first level (WUTS1). We can however ask whether, behind this major structure it is not possible to discover regional organisations of a lower level, especially in the peripheral and semi-peripheral areas, which are not well represented on previous maps. We have therefore decided to apply an economic equilibrium model of interaction, which controls the capacity of each state to import and export but does not control geographical distance, in order to define the regional aggregate of states that has more commercial relations than expected thus defining what economists call “natural geographical regions”20. All things being equal in terms of economic size, some states develop clear regional preferences which are revealed by the map of positive residuals (Map 21). Omitting distance in this interaction model helps to reveal how the cost of transportation and other types of historical and cultural proximities influence trade relations between states. At less 12 integrated trade regions can be derived from this analysis, some with clear limits (e.g. Southern Africa) but the majority with overlaps, as in the case of the Euro-Mediterranean area, which in 1996-2000, clearly crossed the area of preferential relations with Russia in Eastern Europe. From these regional preferences, the map also reveals long distance preferential trade relations, especially in the case of relations between the USA and Eastern Asia but also between Eastern Asia and the Persian Gulf. Looking at the negative residuals, we can symmetrically define barrier effects between regions which have a lower level of trade relations than was expected, given their economic size (Map 21). This is obviously the case when we consider trade relations between the European Union, Northern America and Eastern Asia. The cost of transportation and the preferential trade agreement between EU members and associated neighbours is clearly revealed by this map which confirms that globalisation does not mean the “End of Geography” (transport costs) and the end of international regulation (political agreements). The negative residuals are less frequent between Northern America and Eastern Asia. They concern mainly Canada and Mexico which are strongly polarised by the USA and, accordingly, do not develop as important relations with the rest of the World. The USA then clearly has a preferential orientation towards

20 Double constraint model on the form Fij = aiOibjDj with Fij = trade flows between state i and state j, Oi = sum of export from state i, Dj= sum of import from state j , ai = constraint parameter for origins and bj constraint parameter for destination.

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Eastern Asia while barrier effects are clearly discernable in respect of the European Union.

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Map 21 : Regionalisation of the World based on trade flows 1996-2000

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3.2.4: Homogeneous regions and territorial discontinuities: the spatial dimension of the inequalities of development We have established in previous sections that the World organisation is strongly defined by the existence of the Great Northern Triad (Northern America, Western Europe, and Eastern Asia) which defines a major system of three interlinked centres surrounded by semi-peripheral and peripheral areas. We have also established the existence of 8-10 minor centres which produce local regional integration at another scale (Oceania, Southern Africa, Southern America, the Persian Gulf, the former Soviet Union, Southern Asia, and South-Eastern Asia). This vision of the World was based on a borderless approach which analysed the economic and demographic flows in a global way, without considering the existence of national borders and without analysing in detail the spatial pattern of transition between major centres of the World and the peripheral or semi-peripheral areas located all around. We will now focus on the practical consequence of this major centre-periphery structure in terms of the inequalities of development. In particular, we will analyse whether the spatial transition between more and less developed countries takes the form of a regular gradient (which would imply the existence of continuous spatial diffusion processes of development) or the form of an abrupt transition with spatial discontinuities (which would imply the existence of more conflictual contacts between homogeneous regions of different levels). One crucial problem for this analysis of discontinuities was the choice of the borders to be taken into account. Indeed, the definition of contiguous states is not really simple (see. FIR and SIR) because some states are connected by a very small border (e.g. Morocco and Spain by Ceuta and Melila, or the UK and Spain by Gibraltar) while others are connected by areas which do not belong to the mainland (e.g. France has a border with Brazil through French Guyana). Moreover, some states exist in close proximity without actually having a common terrestrial border (e.g. Italy and Albania) while other states share a common terrestrial border though their economic and demographic centres are far and the border, which is located in a very lowly populated area (e.g. Algeria and Niger). We have therefore decided to propose an extended definition of political contiguity through the construction of a buffer area of 450 km which allows us to define contiguity between states separated by short maritime distances (Map 22). On the other hand we have decided to ignore the contiguity between states that do not share a border of minimum 10 km. This theoretical choice has consequences of course for the elaboration of the maps and tables, particularly in respect of the

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highest discontinuities of development between the states of the World presented in next sections.

Map 22 : Terrestrial borders extended to short maritime distances

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3.2.4.1. Inequalities and discontinuities of Human Development in 2002 Map 23 presents the distribution of the Human Development Index (HDI) in 2002 thus helping to define the relative part of reality and illusion for the so-called North-South division of the World (see Introduction). It is first and foremost obvious that the “north-south” epithet is a poor and indeed largely false geographical description of the spatial pattern of inequalities of spatial development. The distribution is better summarised by a geographical opposition between 3 regions which are more or less distributed according to latitude: very highly developed countries in the temperate zone of the northern hemisphere, less developed countries in the inter-tropical area and relatively highly developed countries in the temperate zone of the southern hemisphere. This division of the World into 3 regions however remains a simplification of reality as there are many exceptions, and as transitions between each zone can often be smooth but are also on occasion quite abrupt.

Table 1 : Major differences of Human development between neighbouring states of the World in 2002

State HDI State HDI Difference Rank Libya 0.79 Niger 0.29 0.50 1 Libya 0.79 Chad 0.38 0.42 2 Algeria 0.70 Niger 0.29 0.41 3 Australia 0.95 Papua New Guinea 0.54 0.40 4 Algeria 0.70 Mali 0.33 0.38 5 Cuba 0.81 Haiti 0.46 0.35 6 Colombia 0.77 Haiti 0.46 0.31 7 Spain 0.92 Morocco 0.62 0.30 8 Libya 0.79 Sudan 0.51 0.29 9 Oman 0.77 Yemen 0.48 0.29 10 Saudi Arabia 0.77 Yemen 0.48 0.29 11 Dominican Republic 0.74 Haiti 0.46 0.28 12 Oman 0.77 Pakistan 0.50 0.27 13 Algeria 0.70 West Sahara* 0.44 0.27 14 Saudi Arabia 0.77 Sudan 0.51 0.26 15 Japan 0.94 North Korea* 0.68 0.26 16 Australia 0.95 Indonesia 0.69 0.25 17 China 0.75 Pakistan 0.50 0.25 18 China 0.75 Nepal 0.50 0.24 19 Algeria 0.70 Mauritania 0.47 0.24 20 * estimations

The analysis of discontinuities presented on map 23 and in table 1 clearly reveals that the most important differences in development terms do not generally take place between the Triad countries and their immediate neighbours which have generally benefited in developmental terms over the last 25 years. It is rather between this semi-peripheral countries and the less developed part of the World

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that such discontinuities are at their most important. This situation is particularly obvious in the case of Europe where the major line of discontinuities in a southerly direction is not located on the southern shore of the Mediterranean Sea but rather on Sahara.

Map 23: Discontinuities of Human Development in the World in 2002

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More precisely, we note the existence of a double line of discontinuities: a minor one between the north and south shores of the Mediterranean Sea and a major one between the north and south of the Sahara, with the World record of differences of HDI between Libya and Niger or Chad. In the rest of the World, major discontinuities are also observed between the northern and southern parts of Asia, between Australia and Indonesia or Papua, between Northern and Southern Korea, etc. In some cases, discontinuities are related to political crisis as in the case of Iraq or Haiti. As the HDI is a synthetic index which combines three different components of development (life expectancy, education level, economic level), we have decided to apply a cluster analysis on the 168 states of the World in order to delineate the factors of development and eventually revealing specific combinations (map 24). The resulting typology reveals the existence of 4 types of countries: Very Highly and Highly developed countries (type A and B) actually cover the majority of the World, although it remains possible to observe differences between countries with very high levels in all criteria (A.1), countries with high levels in all criteria (A.2) and countries with a high level of education and life expectancy but medium economic levels (B.1). In Europe, these 3 types are clearly illustrated by EU15 (e.g. Germany), NMS (e.g. Hungary) and candidate countries (e.g. Romania, Turkey). This type B.1 is also represented in northern Africa (Algeria, Libya, and Tunisia) and is observed in most countries of Latin America and in China. The type B.2 is characterised by a very low economic level combined with relatively high levels of education and life expectancy. It can be especially observed in former socialist countries (Serbia, Moldova, Armenia, Vietnam, and Outer Mongolia) and some other countries subject to recent economic crises (Peru, Indonesia). Medium and Less developed countries (type C and D) are mainly located in Africa and southern Asia, with the addition of some of the countries of Central America. The case of countries from type C with relatively high levels of education and economic development, but a dramatically low level of life expectancy due to the impact of AIDS since 1985 presents a very specific situation. Most countries of southern part of the African continent have experienced reductions in life expectancy of more than 10 years and are terribly hampered by the economic and social consequence of this tragedy. The countries with medium development are differentiated according to their relative advantages in education (type D.2, characteristic of eastern Africa) or life expectancy (type D.1 characteristic of India and some Muslims countries). The worse situation of a very low level of development for all criteria (type D.3) is characteristic of sub-Saharan African countries without access to the sea (e.g. Niger, Chad) or countries subject to recent political crisis or wars (Afghanistan, Liberia).

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Map 24 : The components of Human Development in the World in 2002

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3.2.4.2. Discontinuities of GDP per inhabitant (pps) in 1996–2000 The research developed in the context of ESPON on the measurement and the cartography of economic discontinuities between neighbouring regions (Cf. ESPON 3.1, FR) revealed that results can vary according to the criteria used between neighbouring regions. The same is of course true at World scale and table 2 indicates that the highest economic discontinuities are not the same in absolute or in relative terms. In the first case, major discontinuities take place between the cores of the Triad and their immediate neighbours (e.g. USA/Mexico or Norway/Russia). In the second case, discontinuities can also appear between less developed countries (e.g. Congo/Zaire or Malaysia/Cambodia).

Table 2 : Major differences of GDP per capita pps 1996-2000 between neighbouring states of the World in 2002

Highest absolute differences Highest relative differences rank State i State j Xi-Xj State i State j Xi / Xj

1 U.S.A. Cuba 24400 Japan North Korea 17.4 2 U.S.A. Russia 21900 U.S.A. Cuba 12.0 3 U.S.A. Mexico 19900 Australia Papua N.G. 11.5 4 Japan North Korea 19500 South Korea North Korea 10.9 5 Norway Russia 18900 Kuwait Iraq 9.9 6 Australia Papua N.G. 18500 Saudi Arabia Sudan 9.2 7 Singapore Indonesia 17500 Iran Afghanistan 8.6 8 Australia Indonesia 17000 Congo Zaire 8.5 9 France Suriname 16600 Saudi Arabia Eritrea 8.2

10 Japan Russia 16000 Saudi Arabia Iraq 7.6 11 Italy Albania 15600 Italy Albania 7.4 12 Italy Serbia/Mont. 15600 Italy Serbia/Mont. 7.4 13 Italy Bosnia 15300 Malaysia Cambodia 7.3 14 Italy Algeria 15300 France Suriname 7.3 15 Luxembourg Germany 14400 Bahamas Cuba 7.2

The cartography of relative differences was preferred for map 25 which confirms and completes the previous analysis of the discontinuities of HDI. On the one hand, we observe that important economic discontinuities can be seen all over the World and not only between the richest countries and their neighbours. On the other hand, the map reveals that discontinuities are organised as “concentric lines” around the major peaks of wealth and define different aureoles which help to clarify the delimitation of semi-peripheral regions. It is very clear in the case of European Union, which is surrounded by a double line of discontinuities to the east and to the south. The same situation can be observed to the south of U.S.A. where Mexico is clearly in an intermediate position, lower than USA but much better off than the Central American countries. The same scheme could be observed in Eastern Asia if regional data was used in China in order to differentiate the coastal area (integrated

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into World economy) and the inner continental regions which currently remain somewhat less developed.

Map 25 : Discontinuities of GDP/inh. in the World in 2002

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3.2.4.3. Dynamics of economic and demographic growth (1950 –2000) The analysis of social (HDI) and economic (GDP/inh pps) inequalities which has been presented in previous sections has revealed the existence of strong lines of discontinuities between the central and peripheral regions of the World. More precisely, it has demonstrated the existence of concentric lines of discontinuities around the poles of the Triad, defining intermediate zones of semi-periphery in terms of economic and social development. These inequalities are not static realities however and, as such, it is important to evaluate their dynamic in the medium term.?? A detailed analysis of the evolution of population and GDP pps of the states of the World over the last 50 years (FR- Vol. II) reveals that the analysis of GDP per capita is not sufficient for a sound evaluation of the real comparative advantages of states in terms of World competition. For example, the stability of the level of GDP per capita of a given state (as compared to the World mean) can be associated either with (1) a joint stability of its share of population and GDP (2) a joint decline of both factors (3) a joint increase in both factors. When we analyse the evolution of the share of World population and World GDP (pps) of each state of the World (Map 26), it is clear that very important changes have occurred over the last 50 years with a global transfer of population and economic production from the traditional centres of the Triad to their peripheries. The fact is that the USA, Canada, the European Union and the states of the former Soviet Union have experienced lower rates of increase in terms of their population and their GDP than the rest of the World. Their population and wealth did not decrease in absolute terms, but their share of the global World was strongly reduced in favour of other countries such as China (for GDP) or India (for population). A synthetic typology of the evolution of the share of World population and GDP of the various states of the World reveals differentiated patterns (map 27). The centres of the Triad have generally experienced a joint decline in their shares of GDP and population. As the reduction was generally equivalent or higher for population than for GDP however, they maintained or indeed even increased their relative level of GDP per inhabitant (type C and D). The states located in their immediate periphery however experienced rather the opposite with a joint increase of their share of population and GDP in the World. Even if their GDP per capita did not necessary increase more quickly than the rest of the World, their economic and demographic size has clearly increased. The states in this situation (type A and B)

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define a “Golden ring” of growth from Mexico to Brazil, Northern Africa, the Middle East and South-East Asia. It is generally only in the deep peripheries, located at longer distance from the Triad that the worse situation of an increase in the share of population associated with a decrease in the share of GDP was manifest (type E).

Map 26: Evolution of World share of population and GDP (1952-1998)

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Map 27 : Joint evolution of the share of the World population and GDP PPS from 1950-54 to 1996-2000

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3.2.4.4. Demographic potentialities for the XXIth century The analysis of past trends has revealed a relatively simple pattern of diffusion in terms of economic and demographic growth from the centres of the Triad to a “golden ring” of growth located in their immediate neighbourhood. What then of the future? It is always difficult to propose scenarios of future spatial trends at the World scale with recent history providing many cruel examples of predictions which proved to be erroneous. One of the best examples here is the famous report on the “Limits to Growth” published by the Club of Rome in 1972, which predicted a dramatic divergences of all factors (energy, population, economy, food ) at World scale and proposed as the only solution a “halt to growth”.21 Benefiting from the work done in the context of the ESPON 3.2 project (TIR), we propose at least to analyse one crucial prospective parameter which is the Index of Sustainable Demographic Development (ISDD) defined as the combination of the median age and the life expectancy of a population. The ISDD is based on the assumption that population ageing is not necessary a problem if life expectancy is growing at the same rhythm. In this case, the “remaining life” of a population is maintained at the same level. It is also based on the assumption that “remaining life” is an important characteristic of states with higher opportunities for social and economic development. Looking at the typology presented in map 28, it is clear that the states located in the “Triad” (type 9) are actually characterized by a combination of important ageing and important life expectancy, thus producing a medium value of ISDD. The historical trajectories indicate that this situation will probably evolve negatively if migrations of the younger population are not developed in order to reduce ageing. Russia, the Ukraine and Belarus are characterized by an important trend towards ageing without important progress on life expectancy, which defines a very low level of ISDD (type 7). East central Europe presents something of an intermediate situation (type 8). The states located in the periphery of the Triad actually present an excellent demographic situation with a very high level of ISDD due to the recent growth in life expectancy combined with a low level of ageing. This is particularly true for states located in Latin America, northern Africa and the Persian Gulf (type 5) where the difference between median age and life expectancy can be greater than 50 years. 21 The irony of this example is that most authors criticized the pessimistic conclusion of this report in the 1990’s when economic growth came back and when population increases appeared to have been much lower than expected. But actually, in the context of the potential risk of an oil crisis, many authors are now asking if, after all, there were not some truth in the Club de Rome’s predictions after all. See Matthew R. Simmons, 2000, Revisiting The Limits to Growth: Could The Club of Rome Have Been Correct, After All? , http://www.energybulletin.net/1516.html

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The situation is not so good in China or Thailand (type 6) where an intensive policy of birth control developed in the 1970’s produced a significant reduction in birth rates and consequently saw an important ageing of population, but one which was not balanced by equivalent progress in terms of life expectancy. The rest of southern Asia (type 4) presents something of an intermediate situation here with lower ageing than in China but lower life expectancy than in America. The countries of Africa are actually characterized by low levels of ISDD because populations are young but with low (type 3) or very low (type 1) life expectancy. Southern Africa is a specific case related to the high incidence of AIDS (type 2). The situation is however evolving, and we can imagine that states actually in types 1-2-3 will evolve into type 4-5-6 which themselves will evolve towards types 8-9. Demographic factors evolve slowly but with powerful consequences in the long run.

Map 28: Demographic potentialities for the XXIth century

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3.3: WORLD UNIFIED TERRITORIAL SYSTEM (WUTS)

3.3.1: Introduction: from NUTS to WUTS …

The analysis of the position of Europe in the World is realised through the compilation of statistics elaborated at the state level. But the definition of the state is not clear, and one of the biggest challenges that this ESPON project has had to face (See: the FIR, and the elaboration of a precise list of 168 states which represent a minimum of 1/10 000 of the population, GDP or area of the World). This list of 168 states provides a clear basis for data collection in a harmonised way, all states being identified by their 3-digit ISO code (like HUN for Hungary or NZL for New Zealand). Having secured the collection of elementary data in an harmonised way, we then started to build a more ambitious tool with the elaboration of an harmonised hierarchical system of World division, entitle, WUTS (World Unified Territorial System) which is directly inspired by the NUTS (Nomenclature of Territorial Units for Statistics) created by Eurostat22 more than 25 years ago in order to provide a single uniform breakdown of territorial units for the production of regional statistics for the European Union. Many divisions of the World into “regions” (clusters of states) are actually used by international organisations, either private (transnational firms) or public (UN agencies) but the case study that we have developed on this topic clearly demonstrates the great variety of solutions which are actually proposed, making it impossible to use any of them as a reference point for ESPON work. Moreover, it is very clear that each proposal for the division of the World into regions implies the elaboration of a “Weltanschauung” (vision of the World) which is not neutral and has a strong influence on political decisions. Benefiting from the fact that a preliminary elaboration of World regions had already been proposed in the context of project ESPON 3.1 Integrated Tools, we decided to further elaborate on this in ESPON 3.4.1. In particular, a revised version was produced and a more general proposal of WUTS organised into 5 hierarchical levels, from the level of States (WUTS 5) to the level of the World (WUTS 0), produced. The different approaches to researching such questions developed in the context of the ESPON 3.4.1 project on the regionalisation of the World (see. part A.1) convinced us that one level of regionalisation was not sufficient and that corrections

22 http://europa.eu.int/comm/eurostat/ramon/nuts/introduction_regions_en.html

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had to be undertaken in respect of the preliminary attempt to delimit regionalisation undertaken in the context of project ESPON 3.1. The WUTS system which is presented in this final report is not intended to be a perfect, or indeed, definitive proposal of World regionalisation and as such it is clear that it suffers from certain limitations: ♦ Many regionalisation criteria are possible, from a thematic and

conceptual point of view (see. A.1) while their results are sometimes contradictory. As a result, it is always necessary to make choices or compromises between alternative solutions.

♦ The availability of data at the World scale limits dramatically the choice of criteria in terms of regionalisation. For example, the fact that trade flows are more easily available and more complete than migratory flows has certainly influenced the results of the regionalisation proposed in this report and explains why the centre-periphery model plays a predominant role in the elaboration of the results.

♦ The focus on areal division rather than on networks and the archipelago of World cities is also a questionable choice which is explained by the domination of database elaborated at the national level. With a good database on cities of the World, we would certainly have proposed a different approach to the division of the World.

♦ The lack of infra-national data has also hampered our work as it obliged us to consider each state as a whole despite the existence of important regional differences. It is not a real problem for small states but it is an important issue in the case of continental states like Russia, the USA, Canada, China, Brazil, Australia or India. In the case of China, it is obvious that we should have split the territory into different regions from the very developed provinces of the pacific coast to the lagging regions of the interior.

Despite these limitations however, we hope that the WUTS system will prove in future to be a useful tool for European Union policymakers, and as such will be more useful than the usual delimitations of regions elaborated by the UN or other organisations. Indeed, this division of the World has been elaborated from an ESPON perspective which leads us to identify regions of interest for Europe which could be considered as not relevant in other part of the World.

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3.3.2: the World in 3 Global Regions (WUTS1) The level WUTS1 (map 29) proposes a division of the World into three “Global Regions” clearly based on the economic model of the Triad. At this level, we assume a vision of the World which is based on the classical “Centre-Periphery” model and where the delimitations are mainly based on economic criteria like trade flows or Foreign Direct Investment flows.

• Euro-Africa (W1) is the part of the World which is mainly polarised by Western Europe in economic terms and also in terms of accessibility. The preliminary results of project EIW produced in the context of ESPON 3.1 demonstrate clearly that in terms of trade flows (1996-2000) and in terms of air flows (2000), we can see that the influence area of Europe covers a wide area from Vladivostok (Russia) to Cape Town (Southern Africa).

• The Americas (W2) is the part of the World economically and politically dominated by the influence of United States or which, at least, is considered as such with the imposition of the “Monroe doctrine” (1823) and particularly by the end of the 19th century, by which time the United States became able to effectively enforce it..

• Asia-Pacifica (W3) is the remaining part of the World which cannot be considered as polarised by one centre but rather by an oligopoly of developed (Japan, Australia, Southern Korea) and developing (China, India) countries. This area fits with the new delimitation of ASEAN which is now actually enlarging towards India.

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Table 3 : Size of the 3 World global regions (WUTS1)

Code Name SUPTO SUPAG POPTO POPUR GDPPS CARBO

W1 Euro-Africa 113 47.8 41.1 30.3 35.7 34.3 35.9

W2 The Americas 29 29.9 26.1 13.7 22.1 32.1 32.0

W3 Asia-Pacifica 26 22.3 32.8 56.0 42.2 33.6 32.1

W World 168 100 100 100 100 100 100

Nbstate Number of states of the ESPON database SUPTO Surface area (sq km), 1999, (AG.SRF.TOTL.K2) SUPAG Land use, arable land (sq km), 1999, (AG.LND.ARBL.HA) POPTO Population, total (inh.),1999, (SP.POP.TOTL) POPUR Population, urban (inh.), 1999, (SP.URB.TOTL) GDPPS GDP, PPP (current international $), 1999, (NY.GDP.MKTP.PP.CD) CARBO CO2 emissions (t), 1999,

(EN.ATM.CO2E.KT)

Source: World Development Indicator 2002, 2003, + Estimations of Project ESPON 3.4.1.

This division of the World into global regions is certainly not perfect and can be further improved. But it has the great statistical advantage of proposing a simple view of the World into three main areas of equivalent economic size, each representing more or less one third of the World’s GDP and of the World’s emissions of Carbon Dioxide at the beginning of the 21st century. Differences are more important in geographical terms (larger area of Eurasia) or in demographic terms (larger population of Asia-Pacifica) but it is certainly the best compromise that can be achieved at this scale (table 3). An interesting characteristic of Euro-Africa is its significant political divisions (113 states) as compared to the Americas (29 states) and Asia-Pacifica (26 states).

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Map 29: The World in 3 global regions (WUTS1)

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3.3.3 The World in 7 Macro Regions (WUTS2) The WUTS2 level (Map 30) proposes a division of the World into 7 macro regions which displays more homogeneous areas inside each of the previous global regions. The level of economic development is a major criteria for this second level of division (division of Asia-Pacifica in two parts) but other criteria are also taken into account such as language (Latin America), common history (Europe and Northern Asia, Southern Mediterranean and eastern Asia) or integration zone (Northern America). As it is impossible to combine all criteria without producing a multiplication of regions, the results must necessarily be seen as a compromise where many choices could be further discussed by the ESPON Monitoring Committee and improved by future researches developed in ESPON II. Concerning the division of the global region of Euro-Africa (W1) into 3 macro regions, we took into account the results of the survey on the “Weltanschauung of the ESPON community” when we established the limits of “Europe and Northern Asia” (W11) reflecting that which is commonly accepted by the majority of ESPON members in their subjective delimitation of Europe. Russia and Turkey23 were involved in this macro region because, historically, they have, perhaps since the Middle Ages, been strongly linked with the dynamic of European development. The elaboration of a specific area for Sub-Saharan Africa (W13) appears obvious according to all demographic, social and economic criteria. While the creation of a specific area for Western Asia and Northern Africa (W12) appeared rather more as a default choice than as an attempt to isolate a so-called ‘cultural area’, based on religious criteria like the “greater Middle East” in the United States. In our opinion, the identity of this area is not only cultural but also demographic, economic and social with intermediate levels between Europe and Sub-Saharan Africa. In terms of size at World scale (Table 4), the 7 macro regions are relatively equal in terms of their surface area (more or less 10-20% of the World for each) which is interesting for cartographic reasons alone. They are however very different in terms of all other economic and demographic criteria. Once more then, we note the extraordinary political fragmentation of the macro regions located in Europe and its neighbourhood as compared to those of the rest of the World.

23 We discussed an alternative solution which saw Turkey relocated into region W12, making possible the elaboration of a complete cluster of “South and East Mediterranean countries” at a lower level (W121). But doing this would have run contrary to the fact that Turkey is officially candidate for EU membership, which is not the case for the other Southern Mediterranean countries. This discussion proved very clearly that the elaboration of the WUTS system is not a purely technical question but a very deep political problem as it is linked to the political vision of the future of the EU. We have no doubt that a significant discussion would have to take place at the political level before the WUTS system was adopted by the European Commission as a prospective tool.

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Table 4: Size of the 7 World macro regions (WUTS2)

Code Name Nbstate SUPTO SUPAG POPTO POPUR GDPPS CARBOW11 Europe & Northern Asia 44 18.1 23.4 13.6 20.9 27.3 26.7 W12 Wes. Asia & North. Africa 25 11.6 6.3 6.0 7.1 4.2 7.0 W13 Sub-Saharan Africa 44 18.1 11.4 10.8 7.7 2.7 2.2 W21 Northern America 3 16.1 18.1 6.8 11.1 25.5 28.0 W22 Latin America 26 13.8 8.0 6.9 11.0 6.6 4.0 W31 Southern and Eastern Asia 15 13.7 26.3 47.2 30.9 19.7 20.4 W32 Western Pacifica 11 8.6 6.6 8.9 11.2 13.9 11.7 W World 168 100 100 100 100 100 100 Legend: see. table A.3 Source: World Development Indicator 2002, 2003, + Estimations of Project ESPON 3.4.1.

Map 30: The World in 7 Macro regions (WUTS2)

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3.3.4 The World in 17 Meso Regions (WUTS3) The WUTS3 level (map 31) proposes a division of the World into 17 meso regions similar to the division elaborated in the preliminary study on EIW developed in the context of project ESPON 3.1. But it is partly modified in order to take into account the constraints of hierarchy (compatibility with WUTS1 and WUTS2) and in accordance with the advice of the experts embedded in project ESPON 3.4.1. This meso-regions level is crucial for statistical and cartographic analysis, especially in the case of flows where the previous WUTS1 and WUTS2 levels are too general and where the national level (WUTS5) is not relevant because of the heterogeneity of the economic and demographic sizes of states. We started typically from the largest states of the World (USA, China, and India, ) in order to build an equivalent aggregate based on groups of states which are strongly related (European Union) or which are sufficiently homogeneous to keep the maximum aggregation in the aggregation procedure.

Table 5: Size of the 17 World meso regions (WUTS3)

Code Name Nbstate SUPTO SUPAG POPTO POPUR GDPPS CARBO

W111 Western Europe 21 3.0 5.6 6.5 11.0 21.1 13.9 W112 East. Europe & North Asia 23 15.1 17.8 7.1 9.9 6.2 12.8 W121 SE Mediterranean 11 4.7 2.2 2.8 3.3 1.9 2.0 W122 Middle East & Central Asia 14 6.9 4.2 3.1 3.8 2.4 5.0 W131 Central Africa 7 4.0 1.4 1.3 1.0 0.2 0.1 W132 Eastern Africa 11 4.4 3.1 3.1 1.5 0.5 0.1 W133 Western Africa 15 4.6 4.2 3.9 3.2 0.6 0.3 W134 Southern Africa 11 5.2 2.8 2.4 2.0 1.4 1.7 W210 Northern America 3 16.1 18.1 6.8 11.1 25.5 28.0 W221 Central America & Carrib. 21 4.4 1.8 3.1 4.4 2.3 1.8 W222 Southern America 5 9.5 6.1 3.8 6.7 4.3 2.3 W311 Eastern Asia 3 8.4 8.8 21.5 16.4 10.8 13.7 W312 Southern Asia 8 4.3 15.6 23.1 13.4 7.7 5.6 W313 South-East Asia 4 0.9 1.8 2.6 1.2 1.3 1.1 W321 Western Pacifica 3 0.4 0.9 3.3 5.4 9.9 7.9 W322 South-Western Pacifica 5 2.2 2.0 5.2 5.1 2.7 2.2 W323 Oceania 3 6.0 3.6 0.4 0.7 1.3 1.7 W World 168 100 100 100 100 100 100 Legend: see. table A.3 Source: World Development Indicator 2002, 2003, + Estimations of Project ESPON 3.4.1

An important criterion here was the choice of aggregates, which could be relevant for the elaboration of European policy recommendations or for the development of strategic plans. The Southern and Eastern Mediterranean region (W121) is typically a region which makes sense from a European point of view as it is related to the Barcelona process. Concerning East- Central Europe and the Balkans, a difficult

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choice was face in relation to the decision to split this area between the new Member States, Russia, Turkey and Balkans, at this level or to wait for the next level (WUTS4). We decided, ultimately, to let this aggregate as a whole at the WUTS3 level in order to make comparisons between Eastern Europe and SE Mediterranean region easier (Table 5).

Map 31: The World in 17 meso regions (WUTS3)

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3.3.5 The ESPON space and its surrounding areas in 12 Micro Regions (WUTS4) The WUTS4 level (Map 32) was elaborated only for the purposes of analysing in more detail the ESPON space in its wider geopolitical and socio-economic context and, more generally, in the context of what we termed the global region of Euro-Africa (W1). In the other parts of the World, this level is not particularly interesting because it is smaller than the size of the largest states and could not be properly realised without the desegregation of the largest countries (the USA, China, India, and Brazil) which is actually impossible, or at least very expensive, and of minimal interest for the ESPON Programme. Micro-regions are particularly useful for the analysis of this wider ESPON space because they introduce internal divisions both in the ESPON area and in its northern and southern peripheries. In terms of migrations, for example, it is interesting to distinguish two aspects: the various origins (Maghreb, Mashreq, the Balkans, and Central Asia) and the various destinations (Northern Europe, West Central Europe, and Southern Europe) and to establish matrixes at this level which is more homogeneous than the level of states. More generally, it is interesting to produce statistical tables where the reference is not the World but the wider ESPON space or the wider area of European ‘influence’ defined at the level of WUTS1 by the region of Euro-Africa (W1).

Table 6: Size of the 11 micro regions in the Wider ESPON space in Euro-Africa (WUTS4)

Code Name Nbstate SUPTO SUPAG POPTO POPUR GDPPS CARBO

W1111 Northern Europe 8 3.0 2.7 4.8 7.3 14.2 9.6 W1112 West Central Europe 7 1.7 6.0 10.1 15.1 30.5 18.6 W1113 Southern Europe 6 1.6 4.8 6.6 8.3 17.1 10.5 W1121 East Central Europe 8 1.2 5.3 4.1 4.7 5.1 7.0 W1122 Balkans & Turkey 8 2.2 8.0 6.7 7.2 4.5 4.9 W1123 Caucuses & Dnepr 6 1.6 7.8 4.5 5.2 2.1 5.9 W1124 Russia 1 26.6 22.3 8.1 10.7 6.3 17.8 W1211 Maghreb 5 7.8 3.8 4.0 4.3 2.5 2.3 W1212 Mashreq 6 2.0 1.5 5.3 4.9 2.9 3.3 W1221 Northern Middle East 5 6.2 5.4 3.1 2.3 1.1 3.4 W1222 Southern Middle East 9 8.1 4.8 7.2 8.4 5.8 10.6 W13 Sub-Saharan Africa 44 37.9 27.7 35.5 21.5 7.9 6.0 W1 Euro-Africa 168 100 100 100 100 100 100 Legend: see. table A.3 Source: World Development Indicator 2002, 2003, + Estimations of Project ESPON 3.4.1. If we consider for example table 6 we can see very important differences in the size of each micro-region in respect of the different criteria. In geographical terms (surface area) the more important regions are typically the peripheral areas of

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Russia (27%) and Sub-Saharan Africa (38%). In demographic terms, each micro-region has more or less the same size (5-10%) with the exception of Sub-Saharan Africa which accounts for one third (36%) but has not been divided into micro-regions. In economic terms, there is a clear concentration in West Central Europe (30%), Southern Europe (17%) and Northern Europe (14%) but it is interesting to observe that many other regions are important when they are considered as a whole and are not split into states. Finally, the table underlines the fact that the repartition of Carbon Dioxide emissions is very different from the distribution of economic or demographic sizes, especially in the case of Russia which produces as much as West Central Europe (18%).

Map 32: The Wider ESPON Space in 12 micro regions (WUTS4)

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3.4 Conclusion: A tool for benchmarking between ESPON 29 and the rest of the world In our answer to the tender, we defined the essence of this ESPON project as “grounding globalisation”. The concept of globalisation is fundamental to a study of Europe in the World, but globalisation takes many forms and the concept can become very loose and descriptive. ESPON as a spatial planning observatory is primarily concerned with the spatial forms that globalisation takes and the spatial strategies that are being developed within and outside Europe to take advantage of the opportunities created by globalisation while also addressing its risks. In this project, perhaps more than in any of the others, ESPON has to address the trans-scalar dimension – the connections between global structures and flows and their replication, impacts and policy initiatives at the macro, meso and micro levels. It is important to recognise the complex nature of these trans-scalar relationships, and the multi-directional nature of the flows and actions. Globalisation is a dynamic, differentiated, contested process infused with risk, not a one-way, top-down, controlled and predictable agency imprinting change on maps. In seeking to “ground globalisation”, to survey its trans-scalar spatial dynamics and spatial policy implications, we need to combine quantitative analysis with qualitative concepts and investigations. For example, Swyngedouw (1997, p.140) argued that “different scalar narratives indicate different causal moments and highlight different power geometries […] Scale is consequently not politically or socially neutral, but embodies and expresses power relationships.” Thus the way in which scale and global spatial relationships are conceptualised and discussed is an important dimension of research into Europe in the World. Our most crucial task was therefore to propose new divisions of the World despite the fact that traditional modes of thinking remained strong in the collective perception of European policy-makers. The survey of the ESPON community undertaken in relation to their visions of the World was a milestone in attaining this objective as it helped the members of the ESPON community to gain awareness of the fact that what they considered “natural” (the division of the World into continents) was in fact a social and historical production, not necessarily relevant for the understanding of the contemporary World. It was thereafter much easier to propose alternative divisions of the World into regions elaborated in a scientific framework according to accessibility, flows or dissimilarity, proposing different solutions for the regionalisation of the World, exactly as we do in the usual practice of the ESPON programme where each project

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proposes different typologies of the ESPON territory in accordance with the specific criteria in question. The major difficulty here was the elaboration of a synthesis of this result which took the form of a hierarchy of World divisions in regions of different sizes within the context of the WUTS system. As in the case of the internal division of the ESPON territory via the NUTS system, the WUTS system elaborated here is not perfect and should certainly be revised and further improved in the future. It is nevertheless a pragmatic tool with the specific advantage of having been elaborated precisely for the European context, as its use in respect of other contexts is not envisaged. The example of the benchmarking of World regions presented in the final section of the chapter illustrates the potential of this tool and hopefully also the level of interest likely to be shown in it from the community of European Spatial Planners. In addition, it also provides, more generally, the basis for further research developed in the next chapters. The ‘added value generated by the WUTS system for ESPON 3.4.1 is the rendering of the multi-scalar analysis of the situation of Europe in the World at various scales of analysis and with harmonised territorial units which have been specifically elaborated in order to fit to European questions (which is not necessarily the case with the regions of the World elaborated by UN agencies), much easier. To illustrate this point, we propose two examples which indicate how the combination of the WUTS levels 0 to 3 can be used in order to produce synthetic tables which can easily be presented on a single page.

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3.4.1: Human development in 2002 We propose firstly to summarise the World distribution of the Human Development Index in 2002 (table 7).

• At the level of Global Regions (WUTS1), Euro-Africa is the least developed part of the World with an HDI equal to 0.67 which is below the World mean (0.70), comparable to Asia-Pacifica (0.68) but much lower than the Americas (0.84). The detailed analysis of the three components indicates that the low level of Euro-Africa main relates to low life expectancy (0.63) as compared to the World level (0.70). For education and GDP, the situation of Euro-Africa is more or less equal to the World mean.

• At the level of Macro Regions (WUTS2), there appears to be a strong differentiation between the various parts of Euro-Africa, with a clear North-South gradient. Indeed, the HDI level is equal to 0.86 in Europe & Northern Asia (W11), 0.69 in Western Asia and Northern Africa (W12) and 0.44 in Sub-Saharan Africa (W13). This means that the global region of Euro-Africa is characterised by a high level of heterogeneity, which is not the case for the Americas or for Asia-Pacifica where internal differences are not so large.

• At the level of Meso Regions (WUTS3) we observe further spatial differentiation inside W11 between Western and Eastern Europe which have different levels of HDI (0.93 and 0.79). They are related to differences in life expectancy (0.89 and 0.75) and economic development (0.93 and 0.71) but are limited for education level (0.96 and 0.91). We do not observe such important differentiations inside the macro regions of Western Asia & Northern Africa (W12), nor inside Sub-Saharan Africa (W13) where the economic level is better in southern Africa but where AIDS produces a significant reduction in life expectancy.

What is interesting with such a table combining different WUTS levels is the opportunity to combine analysis at different levels, and to introduce various contexts into the evaluation of the situations. Completed by a map at the state level (WUTS5), this table provides a perfect synthesis of the phenomena of most interest for European policy-makers (and researchers ).

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Table 7: Distribution of Human Development with WUTS

World Unified Territorial System Size Human Development Index Code Name States Pop Life Educ GDP TOT

W WORLD 168 6236 0.70 0.75 0.64 0.70

W1 EURO-AFRICA 113 1882 0.63 0.75 0.63 0.67

W11 Europe & Northern Asia 44 814 0.82 0.94 0.82 0.86 W111 Western Europe 21 392 0.89 0.96 0.93 0.93 W112 Eastern Europe & Northern Asia 23 422 0.75 0.91 0.71 0.79

W12 Western Asia & North Africa 25 385 0.73 0.70 0.64 0.69

W121 SE Mediterranean 11 183 0.75 0.67 0.64 0.69 W122 Middle East & Central Asia 14 202 0.71 0.73 0.64 0.70

W13 Sub-Saharan Africa 44 683 0.36 0.55 0.41 0.44

W131 Central Africa 7 84 0.30 0.53 0.37 0.40 W132 East Africa 11 206 0.38 0.53 0.39 0.43 W133 West Africa 15 238 0.42 0.50 0.39 0.44 W134 Southern Africa 11 155 0.28 0.67 0.50 0.48

W2 THE AMERICAS 29 856 0.80 0.90 0.81 0.84

W21 North America 3 424 0.86 0.94 0.92 0.91

W210 North America 3 424 0.86 0.94 0.92 0.91

W22 Latin America 26 431 0.75 0.86 0.70 0.77 W221 Central America & the Caribbean 21 192 0.75 0.82 0.65 0.74 W222 Southern America 5 239 0.75 0.89 0.74 0.79

W3 ASIA-PACIFICA 26 3499 0.70 0.72 0.60 0.68

W31 Southern and Eastern Asia 15 2948 0.69 0.70 0.58 0.66

W311 Eastern Asia 3 1320 0.76 0.83 0.64 0.74 W312 Southern Asia 8 1466 0.62 0.56 0.53 0.57 W313 South-East Asia 4 162 0.71 0.82 0.59 0.70

W32 Western Pacifica 11 551 0.79 0.87 0.73 0.80

W321 Western Pacifica 3 197 0.91 0.95 0.91 0.92 W322 South-Western Pacifica 5 330 0.71 0.82 0.61 0.71 W323 Oceania 3 24 0.89 0.99 0.92 0.94

Legend WUTS Code of WUTS units Name Name of WUTS units States Number of states Pop Population in 2002 (thousands) Life Life component of Human Development Index in 2002 Educ Education component of Human Development Index in 2002 GDP Economic Component of Human Development Index in 2002 TOT Human Development Index in 2002 Source: Human Development Report 2004; Missing values estimated by ESPON 3.4.1

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3.4.2: Distribution and the evolution of GDP per capita (1980-2004) Concerning the distribution of GDP per capita, in constant dollars (2000 prices), the hierarchy is not the same as for the HDI (table 8), with Euro-Africa performing better here. At the WUTS 1 level it is number one, exceeding the scores of both the Americas and Asia-Pacifica, despite the low GDP per capita in several parts of sub-Saharan Africa. This hierarchy has changed significantly since the 1980s when the Americas led the field in this respect. Each upper level WUTS (WUTS 1, 2 and 3) has seen a regular increase in its performance. At the lower level (WUTS 11, 12, etc.), there are however dramatic contrasts between clusters of states. As far as Euro-Africa and Asia-Pacifica are concerned, there are huge gaps between WUTS 11 and 13 and between WUTS 32 and 31. Such gaps also exist between Latin and North America though the average GDP per capita is higher in WUTS 22 than in WUTS 13 and 31. Comparing this third level WUTS, one also notices that North America tops the hierarchy, followed by Western Pacifica and then, only at the third rank, by Europe and Northern Asia burdened by the low performances of WUTS 112. Within these hierarchies, the evolution of Euro-Africa’s rank is somewhat different from that outlined above. Euro-Africa’s performance has stagnated somewhat in the last 25 years for several economic and political reasons (from 6.239 to 6.394 with a significant decrease in the Middle East), while GDP per capita has dramatically increased in the Americas and Asia-Pacifica. At a lower level, Western Europe is not the richest region in the World, in term of production per inhabitant, coming in second after the Western Pacifica. In addition, the table also shows a growing gap between Western Europe and North America. This evolution is due to two main factors:

- The NAFTA (WUTS 210) includes a developing country with growing population (Mexico) which reduces the global level of GDP per capita. ,

- The rapid increase of the GDP per capita in Western Europe is largely due to what has been called the “golden decline” in previous interim reports of this project. The population has almost stagnated in Western Europe (from 368 to 392 million inhabitants) whereas it has increased from 327 to 420 in North America.

Inside Euro-Africa, the gap between Western Europe and other WUTS of the same level has also enlarged. Western Europe increasingly appears to be a wealthy island surrounded by poverty, especially in sub-Saharan Africa, which can be compared only to Southern and Eastern Asia in actual performance. These 25 year tendencies are not necessarily however complementary, as for instance, the positive evolution

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of Western Pacifica (WUTS 31) has been much more rapid than the evolution of Subsaharian Africa (WUTS 13), as shown in table 8.

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Table 8: GDP per capita Annual average GDP per capita (in constant US 2000 dollars) distributed in periods of five years

World unified territorial system Size Code Name States 1980-84 1985-89 1990-94 1995-99 2000-04 W 0 WORLD 164 6657 6915 7340 8018 8900 W 1 EURO-AFRICA 108 6239 5462 5331 5898 6394 W11 Europe & Northern Asia 43 9083 10244 11010 12070 13809 W111 Western Europe 19 15592 17575 19332 21482 24383

W112 Eastern Europe & Northern Asia 24 2574 2914 2689 2657 3235

W 12 Western Asia & Northern Africa 22 8877 5404 4261 4855 4500

W 121 South & East Mediterranean 10 3064 3077 3291 3644 4040 W 122 Middle East & Central Asia 12 14689 7731 5232 6065 4960 W 13 Sub-Saharan Africa 43 759 738 720 771 873 W 131 Central Africa 7 1225 1073 1001 1139 1337 W 132 Eastern Africa 10 437 534 578 599 676 W 133 Western Africa 15 353 324 287 292 309 W 134 Southern Africa 11 1023 1022 1016 1052 1170 W 2 THE AMERICAS 28 9176 10056 10591 11690 12767 W 21 North America 3 14950 16720 17535 19268 21665 W 210 Northern America 3 14950 16720 17535 19268 21665 W 22 Latin America 25 3401 3392 3648 4111 3869 W 221 Central America & Caribbean 20 3116 3127 3269 3529 3149 W 222 South America 5 3687 3657 4026 4694 4589 W 3 ASIA-PACIFICA 25 4557 5227 6099 6744 7539 W 31 Southern & Eastern Asia 12 458 436 511 577 686 W 311 Eastern Asia 2 322 458 480 551 706 W 312 Southern Asia 6 292 344 397 465 532 W 313 South-East Asia 4 761 505 655 727 819 W 32 Western Pacifica 13 8655 10018 11687 13170 14393 W 321 Western Pacifica 2 14234 17129 20903 23001 24863 W 322 South-Western Pacifica 5 2759 3229 4218 5272 5791 W 323 Oceania 3 8972 9696 9939 11237 12525 Source: World Bank

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3.4.3: Financial flows Regarding the geographical distribution of FDI inflows, the actual hierarchy is different (table 9). Euro-Africa is by far the top destination of FDI flows in the World, attracting far more (more than double) that of the Americas and more than five times more than Asia-Pacifica. Once again however dramatic contrasts within the Euro-Africa zone are easily discernable. This is particularly so in relation to parts of the Middle East and the majority of sub-Saharan Africa, both of which are highly unfavoured in this respect. Such contrasts should be a major subject of concern for Europe. Such regions need huge amounts of investment to support their social and economic development, where the current historical level of GDP increase is not enough to counteract and absorb the increases in their population. In other words, financial capital is stored up on the northern shore of the Mediterranean Sea while population levels and the labour force are growing without sufficient financial support on the southern shore. As noted in respect of GDP, such contrasts do not exist in the Americas or in Asia-Pacifica, where the distribution of inflows is better balanced, especially at the WUTS 3 level, where the attractiveness of China (WUTS 311) makes it the primary destination of FDI flows with almost 50% of the total. The rest of Asia-Pacifica, mainly WUTS 321 and 322, however displays surprising figures with relatively low inflows. The countries of this region seem to be less engaged in financial globalization than Western Europe and North America. This conclusion is confirmed by the average level of openness of European economies, in terms of their share of external trade in relation to their GDP. As such, the economies of Western Europe are much more open that the other economies of the Triad such as Japan and the United States. The evolution of Europe in the last 25 years has been spectacular. Trailing in a distant second position, far behind Northern America at the beginning of the 1980s, it now tops the hierarchy, attracting much more than 50% of the total FDI inflows in the years after 2000. This optimism must however be qualified. In fact, a large part (about two thirds) of FDI inflows to Western Europe come from other countries in Western Europe, which is obviously not the case in the United States for example. Nevertheless, this table confirms the notion that Europe is the most attractive place in the World for investors.

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Table 9: FDI Inflows, Annual average inflows in millions of current US dollars, distributed in periods of five years (World Bank)

World unified territorial system Size Code Name States

1980-84 1985-89 1990-94 1995-99 2000-04

W 0 WORLD 165 56 277 123 968 196 722 579 324 854 674 W 1 EURO-AFRICA 106 22 779 48 935 96 271 271 620 524 600 W11 Europe & Northern Asia 43 16 051 47 147 90 526 258 252 505 943 W111 Western Europe 19 15 893 46 758 86 272 236 901 473 946

W112 Eastern Europe & Northern Asia 24 158 389 4 254 21 351 31 997

W 12 Western Asia & North Africa 19 6 012 1 553 3 846 7 489 10 133 W 121 South & East Mediterranean 8 1 062 1 578 1 928 4 540 7 988 W 122 Middle East & Central Asia 11 4 951 -25 494 1 918 2 948 2 145 W 13 Sub-Saharan Africa 44 715 1 135 1 898 5 879 8 523 W 131 Central Africa 7 227 181 63 245 1 779 W 132 Eastern Africa 11 51 76 100 612 1 227 W 133 Western Africa 15 324 826 1 402 2 329 2 060 W 134 Southern Africa 11 112 52 334 2 693 3 547 W 2 THE AMERICAS 36 26 846 58 894 58 853 219 347 237 354 W 21 North America 3 22 789 55 061 48 848 170 694 197 620 W 210 Northern America 3 22 789 54 089 48 848 170 694 197 620 W 22 Latin America 33 4 056 3 833 10 005 48 653 39 734 W 221 Central America & Caribbean 18 1 177 972 3 918 13 179 11 760 W 222 Southern America 15 2 879 2 861 6 087 35 474 27 974 W 3 ASIA-PACIFICA 23 6 652 15 440 41 998 88 358 92 721 W 31 Southern & Eastern Asia 13 9 871 3 570 19 875 50 981 55 092 W 311 Eastern Asia 2 529 2 487 16 066 40 574 46 440 W 312 Southern Asia 7 167 348 1 028 3 893 4 592 W 313 South-East Asia 4 291 735 2 781 6 514 4 060 W 32 Western Pacifica 10 5 665 11 870 21 723 37 377 37 629 W 321 Western Pacifica 2 333 789 2 189 8 143 12 042 W 322 South-Western Pacifica 5 2 867 4 182 11 971 19 957 13 528 W 323 Oceania 3 2 464 6 899 7 563 9 277 12 058

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4. PART B: HOW IS ESPON EMBEDDED IN THE WORLD BY FLOWS?

4.1 Introduction We have seen in the general introduction of this report that globalisation is not a new phenomenon; neither is the fact that regions are interacting in networks something new. During the first globalisation boom – the century prior to 1914 – trade, migration and capital flows in the Atlantic community played an important role in promoting economic prosperity. Such activities took place in networks and were a regional phenomenon rather than a national one (O’Rourke & Williamson 2000). This is not a new scientific finding – on the contrary. Several major works in economic history have stressed the importance of regions and how they interact through trade, migration and capital flows (Dillard 1967, Kenwood & Lougheed 1989, Pollard 1991, Veltz 1996, Castells 1996). Yet, in many current analyses the functionality of a network of relationships is rarely taken into account. There is much reluctance to take these insights on board, with institutional, methodological and ideological inertia still providing significant obstacles to the necessary need to rethink these issues.

In this part of the report we will try to balance the findings of the previous

chapter on the “Divisions of the World”, especially that part on the elaboration of a hierarchical territorial division into WUTS, which could have given the false impression that globalisation can be reduced to the simple emergence of a new level of territorial organisation between the level of states and the World level. In particular, we will try to show that, in the European territory which is currently in a new phase of rapid integration, particular attention should be paid to exchange and cooperation networks, inside ESPON 29 of course but also between ESPON 29 and the World. By viewing territories and networks of cities and regions in terms of the way they articulate one with another and in terms of functional relationships, rather than principally in terms of locality and distribution, this part of the report highlights possible future integration patterns for the European space in the emerging World economy.

The issue is not to set out a new normative model, or a new dominant theory. The objective of the analysis is to show why it is now relevant to read spatial dynamics in terms of interconnections and reticulations rather than being viewed in a polarised and pyramidal manner. The main objective of defining the place of ESPON 29 in the World is to provide a necessary counterweight to the dominant visions and perceptions of the research on the World and European networks and cities dynamics. Indeed, on the one hand, the description of European and World flows

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leads many researchers to define, between countries or between several regional blocs, the main roads of international exchange (Dollfuss 1994). On the other hand, the great majority of existing research in this area seeks to produce knowledge on the cities or regions themselves, to evaluate their strengths and weaknesses, and to estimate their growth rates (Sassen 2002). Consequently, this means that a large majority of studies constantly produced and reproduced urban and regional typologies. Peter Taylor (2002) denounces the paradox of research on the World cities in the following way: “Whereas the essence of World cities is their relations to each other, studies continue focusing on case studies and comparative studies evaluating patterns within cities and neglecting ipso facto intercity relations”.

During the scientific elaboration of this part of ESPON 3.4.1 “Europe in the

World”, heated internal discussion took place between a group of researchers who considered that the centre-periphery model (Figure 6) was the most relevant one of World organisation and that it was possible to define an influence area for Europe or any other group of countries which utilised the World archipelago model (Figure 7), which, they argued, better fits the new reality of a World where networks are more important than territories. It is clear however that the empirical analysis of flows ultimately presented in this chapter provides different answers to the question of the best model choice:

• The analysis of economic flows developed in B.1 clearly provides arguments

in favour of the centre-periphery vision of the World. • The analysis of air flows presented in B.2, on the contrary, clearly supports

the network-archipelago vision of the World. • The analysis of migration trends presented in B.3 in the main supports the

centre-periphery vision of the World, but also demonstrates that the pattern of migration is different according the educational level of the migrants. Migrations of low-skilled workers follow the centre-periphery pattern while those of high-skilled workers are rather more closely aligned to the archipelago model.

Considering that both models are complementary, the final synthesis will propose two different approaches: (1) an “areal oriented approach” which tries to delimit, in a quantitative manner, a so-called ‘ESPON Influence Area’ in the World and (2) an “network oriented approach” which tries to elaborate, in a qualitative manner, a typology of connections between ESPON and the rest of the World

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Figure 6: The Centre-Periphery vision of the World

Figure 7: The Network-Archipelago Vision of the World

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4.2 A functional approach: The Triad and the centre-periphery division of the World In opposition to some of the ideas circulated by, among others, major international institutions such as the OECD, who see in the development of globalization the expansion of major opportunities for all24, we would like, on the one hand, to qualify the globalization process and, on the other, to insist on the hierarchies and imbalances provoked by this process at a moment where many doubts has recently emerged against the former “Washington consensus”. 25

4.2.1 ESPON’s Place in the World Economy It is first necessary to recall some of the major elements of the structure of the World economy and to evaluate the place occupied by ESPON in this context. From an historical point of view, let us remember that globalization is a process with a long heritage, in which Western Europe has played a major role (Wallerstein, 1980, 2002). Since the sixteenth century, the old continent has built the World in accordance with its own views and interests. In this first part, we use only the centre-periphery vision of the world and we do not introduce the alternative vision of world as global cities or archipelago. We consider in fact several centres, that is to say, the three poles of the Triad (Western Europe, North America, and East Asia), and peripheries which, per definition, are very diverse in their structures and forms of dependence. Centres are characterized by their weight in terms of global production and flows, and by their social and economic structures as well as their leading role in the World economy. This is illustrated for example by their position in the World economic institutions or the location of transnational headquarters. The concept of centres however only assumes its meaning in the context of the dialectical relations which take place between the poles of the Triad and their peripheries: centres only exist through their dominant relation with their peripheries. These links are characterised, from the trade flows point of view, by a relation of dependence, on both quantitative and qualitative aspects.

24 As an example, we produce this extract from an OECD publication (OECD observer, Sept. 2001), ”trade is not an end in itself [….] But it creates jobs. It fosters vital learning processes […] It increases foreign exchange earnings. Above all, it contributes to generating the resources for sustainable development and the alleviation of poverty.” 25 Joseph Stiglitz (2002), Globalization and Its Discontents (New York: Norton)

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From the quantitative approach, these imbalances can be observed in terms of the exclusive relations of the peripheries with their centres, while centres mostly trade between themselves. This reality is well illustrated by maps 33 & 34: the first shows the commercial area of influence of ESPON 29, that is to say, the countries that count for ESPON, while the second shows the areas with which ESPON trades. The most caricatured example is the one relating to sub-Saharan Africa: while it is of negligible importance for European trade, the inverse is true for Sub-Saharan African countries as Europe is vital for the existence of this part of the World.

Map 33: Share of the trade with ESPON 29

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Map 34: Share of each country in the External trade of ESPON 29

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4.2.2: Trade and inequalities

From a qualitative point of view, the imbalance is shown by the types of products that are exchanged: while centres mostly sell products of high or average technologies or advanced services, peripheral countries sell low technological labour intensive products and services (textiles, call centres etc) or primary products. Figure 8 shows the exchanges between Europe, on the one hand, and North America, Asia and South America, on the other hand. While the trade with North America and Asia illustrates the specializations of the different poles of the Triad (for example chemistry for Europe, office equipment for North America, textiles for some Asian countries, and machinery for Japan), the trade relation with South America displays a classical centre-periphery trade pattern, with centres selling industrial products and the periphery, primary products. We can draw the conclusion from these analyses that globalization is a very hierarchical process: while the poles of the Triad are involved in interdependent relations, the links between the centres and peripheries are marked by the dependence of the latter on the former. As we have already underlined however, this does not mean that the periphery as a whole is a vast homogeneous mass. On the contrary, some countries have been able, or will in future be able, to change their position in the World economy. Nevertheless, this does not affect the model in itself if we consider that the gap between developed and underdeveloped countries has generally been rather stable over the last fifty years. Moreover, some could argue that in each peripheral country, there are poles strongly connected to the rest of the World and with an emergent middle class, which in some ways can benefit from globalization process. As such then, rather than invalidating our model, this urban bourgeoisie plays an active role in the permanence of the domination of the centre.

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Figure 8: External trade of Western Europe by type of product, with North America, Asia and Latin America (1998-2002), in billions of current $

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Against some networking approaches, which insist for example on the consideration of realities such as the importance of the relations between the major poles of the peripheries (Sao Paulo, Johannesburg, Bangkok etc) and the centres, we would like to recall that:

o the importance of these links should not be overestimated if one compares them to the links between poles inside the centre ;

o the centre/periphery approach is a multi-scalar one, that is to say, that inside the centre and inside the periphery at the World scale, a geographical structure in centres and peripheries exists at a finer scale, which implies real processes of domination between poles which are the decisions and areas that are subject to these decisions.

Finally, we would like to strongly qualify the importance of the globalization process, particularly for the EU. We have thus made an evaluation of the openness rates26 of the three poles of the Triad (for Asia, we only consider Japan). For each of the three areas, the openness rate is about 14 percent of GDP (table 10). This means that these economies depend mostly on themselves, since investment is for example a very regionally-oriented process. In other words, and despite the intense growth of trade in recent decades the major poles still have relatively closed economies.

Table 10: Openness rate of Europe, USA and Japan

Openness rate 1996-2000 (%)

Share of the trade outside the commercial area (%), 1996-2000

EU 25 14,1 31,7 ESPON 29 14,3 31,6 NAFTA 13,5 69,4 Japan 17,5 100,0

26 Openness rates are defined by the ratio between the sum of exports and imports and global GDP. This indicator overestimates the opening of the economies since it compares sales (imports and exports) to added values (GDP).

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4.2.3: Trade flows and the Triad Using a variant of the methodology proposed in the preliminary ESPON study on Europe in the World (ESPON 3.1, FR), we have tried to evaluate for each state the importance of its bilateral trade flows with each pole of the Triad and with the rest of the World. The practical problem of the delimitation of states who are members of the Triad has been empirically solved by using the WUTS level 3 delimitation for Western Europe (W111) and North America (W211), but not for Asia where Western Pacifica (W321) has been aggregated with China27. The distribution of the economic polarisation of the states of the World by the Triad reveals a very interesting spatial pattern (Map 35) which does not fit exactly with the simplistic view of concentric circles of decreasing influence around each centre of the Triad.

• The most important states located in the cores of the Triad are generally less polarised by their own region than the smaller states localised in their immediate neighbourhood. This is obvious in the cases of Japan and the USA and, to a less degree, in the cases of Germany or the United Kingdom. It is apparently a simple statistical effect (internal economic relations of these core-states are not taken into account) but it also reveals a real asymmetry between this core-states which are more likely to play a role as global economic actors than the smaller states that they polarised.

• The area of influence of Western Europe in terms of trade is spreads far to

the south, but is clearly limited in an easterly direction (where Russia remains the major partner for most states created after the collapse of the Soviet Union) and to a lesser degree a the south-easterly direction, where the oil-rich states of the Persian Gulf are mainly oriented toward Eastern Asia. This specificity of oil trade is also visible in Africa where Gabon and Angola are more oriented toward North America than Western Europe.

• Very important and strategic parts of the contemporary World cannot be

considered as polarised by one of the three poles of the Triad. The former Soviet Union (with the exception of the Baltic countries which joined the EU in 2004) clearly remains an integrated economic zone. Latin America is now also beginning to form an area of economic integration (MERCOSUR) and has

27 Normally, we should have included only the coastal regions of eastern China in the definition of the Asiatic core of the Triad. This is not a major problem however as the majority of China’s international trade is located in these costal regions.

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equal trade relations with Western Europe (26%) and North America (24%). A similar situation can be observed in India where the equilibrium of influence of each pole of the Triad and the importance of flows with the rest of the World ensures a situation of strategic independence. The situation is however rather different in East Africa where Western Europe remains a major partner (40% of trade) but where trade flows with rest of the World are basically equivalent, due to a relatively high level of local regional trade between the Eastern and Southern African countries.

Map 35: Dominant trade orientations 1996-2000

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Table 11: Trade between WUTS3 regions and the Triad in 1996-2000

World Unified Territorial System Size Economic orientation Code Name Billions $ World% W.Eu N.Am E.As Rest W WORLD 10668 100.0 37 23 18 22

W1 EURO-AFRICA 5003 46.9 60 11 9 20

W11 Europe & Northern Asia 4490 42.1 63 10 8 20 W111 Western Europe 3979 37.3 64 11 8 18 W112 Eastern Europe & Northern Asia 512 4.8 52 6 6 36 W12 Western Asia & Northern Africa 367 3.4 37 14 23 26 W121 SE Mediterranean 152 1.4 56 17 7 19 W122 Middle East & Central Asia 216 2.0 23 12 34 31 W13 Sub-Saharan Africa 145 1.4 41 17 15 27 W131 Central Africa 12 0.1 47 26 12 15 W132 East Africa 16 0.1 41 7 13 40 W133 West Africa 47 0.4 41 20 11 27 W134 Southern Africa 70 0.7 39 16 18 26 W2 AMERICAS 2765 25.9 18 43 19 20

W21 North America 2400 22.5 18 44 20 18 W210 North America 2400 22.5 18 44 20 18 W22 Latin America 365 3.4 22 36 11 32 W221 Central America & Caribbean 159 1.5 16 51 7 25 W222 South America 206 1.9 26 24 13 38 W3 ASIAPACIFICA 2900 27.2 16 23 34 27

W31 Southern and Eastern Asia 1156 10.8 17 21 41 21 W311 East Asia 912 8.5 16 21 44 18 W312 Southern Asia 104 1.0 28 20 17 34 W313 South-East Asia 141 1.3 17 18 35 31 W32 Western Pacifica 1744 16.3 16 25 29 30 W321 Western Pacifica 1043 9.8 16 28 26 30 W322 South-Western Pacifica 550 5.2 15 21 33 32 W323 Oceania 151 1.4 19 18 35 29 NOTES Definition of Trade areas Specialisation index W.Eur. EU15, Switzerland, Norway > 1.5 N. Ame. USA, Canada, Mexico 1 to 1.5 E. Asia Japan, S. Korea, China, Taiwan 0.5 to 1 Rest Rest of the World 0.5< Source: PC-TAS, Completed by ESPON Projects 3.1 & 3.4.1

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4.3 Networking ESPON 29 through air flows

4.3.1 Re-thinking hierarchies, areas of influence, borders and other concepts

Several studies underline the fact that today new forms of territorial organisation and spatial integration28 are emerging as a result of the spectacular growth in mobility, rapidly changing transportation networks and the spread of communication and information technologies. Nevertheless this dynamic phenomenon does not produce the same effects at either a World level or at the level of ESPON territory. One cannot therefore understand the processes of territorial integration without first taking into account the complexity of the spatial integration schemes.

Indeed, World and ESPON territorial integration has often been reduced to two conventional models: the centre-periphery one, and the hierarchical model of urban networks. The World or the ESPON space are thereby depicted in one or other of these two ways: either in terms of strong centres to which peripheral territories manage to tie themselves to greater or lesser degrees, or of major metropolises in whose shadow secondary cities lie hidden.

Limiting territorial integration to these two schema means that such integration will be fragile and limited. The mode of organisation of the World and of the ESPON territory is in reality much more diversified. On the one hand, territorial organisation is supported by specialised networks of cities as defined by common patterns of either material or non-material production, while on the other, territorial organisation takes place through networks of cities that are either economic or political capitals. Intensified exchange between these types of city networks is currently the most dynamic force for territorial organisation operating across the World space and the ESPON territory. These forms of territorial organisation can be defined as Metropolitan polycentrism. Freed from the constraints of distance, urban hierarchies and political boundaries, the spatial integration processes tends to emphasise the interrelations among cities in a network, and in this way they are the vectors of a dynamic polycentric organisation of the World as well as the ESPON space (Cattan, Saint-Julien 1998).

In this section we focus on the analysis of networks and cities that connect ESPON to the rest of the World. It is a trans-scalar approach which does not work with an

28 Note here that we are referring not to political integration in the context of the EU, but rather to the spatial integration of the wider ESPON 29 area. The two should not necessarily be conflated.

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assumption of contiguity (continuous territoriality) but rather with an assumption of connectivity (discontinuous territoriality). A strong hypothesis is proposed in relation to the fact that many human activities are not present in all points of a territory but are concentrated in several specific areas strongly connected to each other. We do believe, for example, that the new “frontier” of the EU is to be found in several international gateways cities and not only on the external borders of the EU territory either at its Eastern limits or at its Southern ones. We also accept the common notion that the World metropolitan archipelago is not necessary connected to the states, regions or macro-regions where the metropolitan areas are located. The analysis proposed here helps us to answer the following question: Is ESPON a dynamic vector for a polycentric organisation of the World space? This study opens up a huge avenue into discovering the way in which the World and the ESPON space are organized vis-à-vis international air flows. Thanks to their relatively large capacity to adjust to the rigours of supply and demand, the air network is a very relevant indicator of globalization and is thus one of the best synthetic indexes of contemporary societal trends. As such, air flows highlight the way in which current integration processes shape the relations of society to space and reorganise the territorial structures at different scales. 4.3.2: The conventional approach based on number passengers In a first step we have tried to analyse air traffic between cities by using the simple number of passengers in 2000, according to ITA database (see Volume II for a precise description of the source)

EU: The centre of the international monocentric air network? The image of the main nodes of international traffic shows the European cities to be the main supporters of this internationalization process (map 36). In this image, air traffic draws a World organisation rather monocentrically concentrated on Europe. The main reason for this is that intra-EU traffic, considered as international (=flows exchanged by two cities of two different countries), is included in the calculation whereas intra-US traffic, considered as national, is not. This figure highlights the fact that definitions of World cities rely very much on the interpretation of the word “international”.

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Map 36: International air traffic

The EU: At the centre of the international polycentric air network…. When excluding intra-EU traffic, the image is more equilibrious, providing a rather polycentric representation of the World through air traffic networks (Map 37). The three classical poles of internationalisation (the EU, the USA, and Japan-South Asia), namely the Triad, appear very clearly. One could again question here the weight of the JSA area: indeed if we consider for example the ASEAN countries as one entity as we have done for Europe what would the resulting image be?

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Map 37: International air traffic, EU traffic excluded

By focusing on flows in a relational approach to territories, following the concept of Manuel Castells’ “space of flows” rather than “space of places”, the following figures attempt to go further showing how Europe is connected to the World system.

EU traffic is the major contributor to the internationalisation of air flows Charting the major air links on a World level makes it possible to highlight privileged associations between places. The World air traffic map shows that the majority of the largest international flows occur in the Northern hemisphere. Major flows go to - and return from - a few select poles, reinforcing the North-South contrast which is voluntarily reinforced by the specific cartographic projection chosen in this section. The main international inter-city flows show that four World interconnection systems summarize the major international air routes, namely EU inter-city connections (among the 15 highest flows, 5 are European), South-eastern Asia connections, EU-US transatlantic city linkages, and trans-pacific city links (Map 38). The World air crossroads can be identified to coincide with the main metropoles: national capitals, such as London and Tokyo, or prominent economic capitals such as New York.

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Map 38: Major international air flows (intra-EU flows included)

Some other regional patterns of globalisation Focused on the connections between Europe and the rest of the World, and considering the EU as one entity (i.e. excluding intra-EU traffic), one can also point out that several regional connections emerge, as for example between Buenos Aires and Santiago and Sao Paulo on the one hand and between Mexican cities and Los Angeles on the other (Map 39). This means that several integration processes at the regional level are actively engaged in these territorial integration processes at the global level.

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Map 39: Major International air flows (intra-EU flows excluded)

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4.3.3 An alternative approach to the World global network derived from Tobler’s work We have seen in the previous sections that the measurement and cartography of global integration by air flows is highly dependant on the level of political aggregation. As such, retaining or eliminating internal traffic within the United States, the European Union or the Western Pacific coastal area introduces crucial differences in the resulting pattern of the World network of cities. From a theoretical point of view29, the problem that we have to faced is then to distinguish between flows which are really global (i.e. connecting different global integration zones) and flows which can be better described as regional (i.e. connecting sub-parts of the World which are strongly integrated and are in practice already global integration zones). The paradox of the previous section is that (1) we analyse flows in order to define relevant GIZ but (2) we need to know what the limits of these GIZ’S are in order to properly analyse these flows. Breaking this vicious circle is possible if we use an alternative measure of flows as suggested by W. Tobler who argues that a good measure for the evaluation of flows is not the single traffic (number of passengers) indicator, but the traffic weighted by distance (number of passengers multiplied by km) indicator, which is in physical terms the “quantity of work” of the relation. This is correlated in economic terms with the “total cost” of the relation and in ecological terms with its “ecological impact”. The comparison of the top 25 air connections in the World according to the usual criteria of passengers (table 12) and the criteria of passengers/km (table 13) indicates that the second solution is probably better when the need is to measure the global connections established between World cities. For the classical criteria of passengers, the majority of the connections take place at short distances (less than 5000 km) and are connecting cities located in the same state (USA) or in the same pole of the Triad (Western Europe, Eastern Asia). On the other hand, for the criteria of passengers multiplied by distance, we obtain a majority of flows at long distance (around 10 000 km) which are precisely those that connect the three poles of the Triad or those which connect distinct parts of a global integration zone (e.g. the eastern and western coasts of the USA). This criterion is also sensitive to specific connections that can be established at long distance for historical and political reasons, as with the connections between the USA and Israel or the connection between France and its remote territories of the Antilles.

29 The problem that we have to face here is very similar to that of “weak ties” in a sociological network. “Weak ties” are specific connections which establish “bridges” between clusters of strongly connected individuals. According to Granovetter, they play a major role in the diffusion of innovations as they do not suffer from redundancy as is the case for links observed inside a cluster that is highly connected.

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Table 12: Most important air flows in 2000 (millions of Passengers)

Rank I j F D FD 1 SEOUL PUSAN 6.0 337 2035 2 NEW YORK FORT LAUDERDALE 5.5 1728 9545 3 TAIPEI HONG KONG 5.5 805 4430 4 NEW YORK CHICAGO 5.3 1145 6025 5 ORLANDO NEW YORK 5.1 1514 7723 6 NEW YORK LOS ANGELES 5.1 3953 20020 7 NEW YORK BOSTON 5.0 306 1533 8 SEOUL CHEJU 4.9 451 2200 9 NEW YORK ATLANTA 4.9 1214 5919

10 WASHINGTON NEW YORK 4.4 346 1528 11 NEW YORK LONDON 4.2 5524 23337 12 LONDON DUBLIN 4.1 438 1790 13 SAN FRANCISCO NEW YORK 3.9 4130 16304 14 MADRID BARCELONA 3.9 484 1885 15 LOS ANGELES LAS VEGAS 3.7 379 1399 16 PARIS NICE 3.4 674 2289 17 LONDON AMSTERDAM 3.2 401 1288 18 OAKLAND LOS ANGELES 3.1 543 1701 19 PARIS MARSEILLE 3.0 628 1877 20 TOULOUSE PARIS 3.0 574 1712 21 PARIS LONDON 2.9 365 1067 22 NEW YORK MIAMI 2.9 1760 5069 23 NEW YORK LAS VEGAS 2.9 3590 10331 24 SAN FRANCISCO LOS ANGELES 2.8 544 1517 25 LOS ANGELES ** CHICAGO ** 2.7 2820 7659

Table 13: Most important air connexions in 2000 (millions of Passengers.km)

Rank I j F D FD 1 NEW YORK LONDON 4.2 5524 23337 2 NEW YORK LOS ANGELES 5.1 3953 20020 3 SAN FRANCISCO NEW YORK 3.9 4130 16304 4 LONDON LOS ANGELES 1.5 8748 12799 5 TOKYO LOS ANGELES 1.4 8809 12435 6 TOKYO HONOLULU 2.0 6187 12364 7 SINGAPORE LONDON 1.0 10903 10938 8 TAIPEI LOS ANGELES 1.0 10895 10666 9 NEW YORK LAS VEGAS 2.9 3590 10331

10 TOKYO LONDON 1.0 9614 10043 11 SYDNEY LOS ANGELES 0.8 12053 9772 12 SAN FRANCISCO LONDON 1.1 8608 9739 13 TOKYO NEW YORK 0.9 10850 9641 14 LONDON HONG KONG 1.0 9670 9602 15 NEW YORK FORT LAUDERDALE 5.5 1728 9545 16 LONDON CHICAGO 1.5 6318 9298 17 PARIS NEW YORK 1.6 5837 9225 18 LONDON SYDNEY 0.5 17038 8984 19 SEOUL LOS ANGELES 0.9 9591 8785 20 TEL AVIV NEW YORK 0.9 9120 8600 21 PUSAN LOS ANGELES 0.9 9604 8563 22 LONDON JOHANNESBURG 0.9 9072 8421 23 TOKYO PARIS 0.9 9733 8358 24 TOKYO CHICAGO 0.8 10141 7857 25 POINTE A PITRE PARIS 1.2 6748 7847

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The map of global air connections in 2000 established by means of the passengers/km criteria (Map 40) provides an excellent illustration of the structure of the network of World cities which appears as an archipelago of cities linked to each other without consideration of national borders or continents (which have been voluntarily excluded from the map).

The Western European Archipelago is clearly monocentric and is dominated by London which is the most important international airport in the World. Amsterdam, Paris and Frankfurt are also major gateway cities but are in a sense part of the same cluster as London. Madrid is a secondary gateway but with specific connections to southern and central America. The North American Archipelago is clearly organised into two separate clusters dominated, respectively, by New-York and Los Angeles. Chicago and San Francisco are alternative World gateways of the second level. Miami plays the same role as Madrid inside ESPON territory, with specific connections to Central and South America. The East Asian Archipelago is organised in an axial pattern of gateway cities dominated by Tokyo, Hong-Kong and Singapore but with important World connexions also in Osaka, Pusan, Seoul, Taipei and Bangkok. If Tokyo and Hong-Kong are well connected to Europe and America, Taipei, Pusan and Seoul are clearly oriented to America while Singapore and Bangkok are more closely connected to Europe.

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Map 40: Global air interactions in the World in 2000

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Table 14: Classification of the World Cities according to air connections in 2000

National and International Flows International Flows Passengers/.km Passengers Passengers/.km Passengers

World Cities

rank % Rank % Rank % Rank % LONDON 1 13.24 1 10.20 1 16.94 1 15.91 NEW YORK 2 10.95 2 8.99 3 7.97 6 4.60 LOS ANGELES 3 8.53 5 5.60 6 6.77 13 2.85 PARIS 4 7.37 3 6.45 2 9.16 2 8.71 FRANKFURT 5 6.02 6 4.65 4 7.68 3 6.60 TOKYO 6 5.84 19 2.43 5 7.57 8 4.19 CHICAGO 7 5.23 4 6.08 14 3.00 30 1.73 SAN FRANCISC 8 5.22 9 3.54 12 3.26 35 1.38 AMSTERDAM 9 4.50 8 3.78 7 5.84 4 6.47 HONG KONG 10 4.21 10 3.24 8 5.46 5 5.58 SINGAPORE 11 4.03 18 2.52 9 5.23 7 4.34 BANGKOK 12 3.04 26 1.96 10 3.94 10 3.38 ATLANTA 13 3.00 7 4.03 27 1.58 48 0.94 MIAMI 14 2.89 17 2.55 18 2.67 17 2.50 SYDNEY 15 2.71 62 0.85 11 3.52 34 1.46 SEOUL 16 2.54 15 2.68 13 3.08 14 2.77 BOSTON 17 2.52 11 3.05 53 0.86 79 0.60 WASHINGTON 18 2.36 13 2.84 38 1.28 66 0.71 MADRID 19 2.27 14 2.77 17 2.70 12 2.98 PUSAN 20 2.20 28 1.93 15 2.73 22 2.01 LAS VEGAS 21 2.15 12 2.91 180 0.12 292 0.05 OSAKA 22 2.09 44 1.25 16 2.71 21 2.15 SEATTLE 23 2.08 25 2.02 69 0.62 135 0.26 ORLANDO 24 2.05 16 2.59 70 0.57 116 0.33 TAIPEI 25 1.92 38 1.58 19 2.49 15 2.71 ZURICH 26 1.90 27 1.95 20 2.46 11 3.17 HOUSTON 27 1.89 22 2.27 48 0.95 49 0.91 MANCHESTER 28 1.66 36 1.71 21 2.12 16 2.56 DENVER 29 1.63 21 2.28 155 0.15 203 0.13 KUALA LUMPUR 30 1.61 53 1.01 22 2.09 29 1.74

Whatever the criteria used for the evaluation of the size of cities in terms of air connections (national or international, measured in passengers or weighted by distance), the ESPON territory appears particularly well connected to the rest of the World via London (1st rank whatever the criteria), Paris (2nd to 4th rank), Frankfurt (3rd to 6th rank) and Amsterdam (4th to 9th rank) (table 145). But if ESPON clearly dominates the top of the list of World cities in respect of air connections, this is less so when considering the following ranks of cities where we find a majority of American and Asian cities and very few European ones, except for Madrid, Zurich and Manchester. This confirms the reality that ESPON World gateways are efficient but also very concentrated in the Pentagon area.

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4.4 Demographic flows towards Europe The main problem that we had to face with the analysis of demographic flows concerned the shortage of reliable data available in respect of the origin and destination of migrants. As a consequence, it is not possible to estimate gross flows and this then hampers the analysis of convergence and divergence, integration and disintegration, and symmetrical and asymmetrical migration patterns. It is then, also not possible to propose an equivalent picture of the World organisation of migrations as in other sections of this part of the report. We have therefore used a simulation model describing the potential flows of migration and investments which could be induced by the unequal repartition of population and wealth in the World (B.4.1). We then referred to the net-migration data to compare the potential of flows and the observed figures of migrants (B.4.2), and finally we used the most reliable, but very partial, source of data on migration flows, the OEDC database, in an attempt to draw a picture of the origin of migrants from the rest of the World flowing toward the ESPON space (B.4.3). 4.4.1 Potential demographic & economic complementarities and figures of net migration This model of potential demographic and economic complementarities proposed by C. Grasland (2001) is based on the research on local equilibrium between allocations of GDP and Population at various scales of spatial interaction. For a given scale, we define areas with relative accumulations of wealth as compared to their neighbours which are represented in red and regions with relative accumulations of population, which are in blue30. The main assumption of the model is that the contact between these two types of region can induce either flows of migration (from “blue” to “red”) or flows of investments and activity relocations (from “red” to “blue”). According to traditional push-pull theories, these disparities should, in a free labour market, give rise to high migration from low wealth/high population growth countries (sub-Saharan countries) to high wealth/low population growth ones (such as the EU25). This implies that a labour surplus and low wages in the developing countries will be the determinant factors behind the migration decisions. In some cases however the mobility of capital can be the driving force with flows directed in the opposite direction.

30 This model has also been applied to the analysis of internal economic and demographic polarisation inside the ESPON territory and is explained in the dictionary of tools proposed in the Final Report of ESPON Project 3.1.

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Map 41: Push-Pull Factors in 1999

Map 42: Net number of migrants at WUTS4 level 2000-05

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Considering long distances of spatial interaction (Map 41) (500-2000 km) provides a simple picture of the ‘push- pull’ factors at the World level which fit very well with the actual trends of migration and FDI. The three attractive poles of the great Triad are clearly visible (Japan, Europe and North America) as are their equivalents of the ‘little Triad’ in the southern hemisphere. Those poles appear as very attractive for migrants. One can also note the potentially highly attractive area formed by the Gulf’s oil-rich countries. The net migrations (map 42) in 2000-05 at the WUTS 4 level confirm, to a certain extent, the model of potential migrations. Europe is, together with North America, the main immigration destination of the World. Some differences in intensity and some exceptions and particular cases have however to be underlined. The main pole of attraction, according to the model, should be Japan. However one can observe that the major net-migration poles are the USA and Southern, West-Central and Northern Europe. Japan seems to have relatively few migrants, due to migration laws and historical and geographical particularities of the region (high densities). The potential map is however confirmed in Japan by the fact that the country is a great exporter of FDI to China and to the other countries of Western Pacifica. What is striking too is that despite parts of South America, South East Asia and Africa (South Africa), appearing as potentially attractive, they are actually net senders of migrants, or receive few migrants. Moreover, a highly unlikely zone, from a migration potential point of view, namely, Central Africa appears to have a positive net number of migrants, probably as it borders m conflict zones such as those of the Democratic Republic of Congo (in the South), Rwanda (in the East) and the Sudan (in the North East). Considering interactions of a rather short distance (250-1000 km) in the Euro-Mediterranean area, we can observe a relatively more complex picture of the complementarities in economic and demographic terms (Map 43). The two main (potentially attractive) poles for migrants (and emissive poles) for capital and investments) are North Western Europe and the Persian Gulf. The net migration map 44 confirms that they are indeed the main poles of net immigration observed in the region. The high number of net migrants in Southern European countries (Spain and Portugal) is striking as in the 1950’s they were net-exporters to the rest of Europe.31 Southern Mediterranean countries (Morocco, Algeria, Tunisia and Egypt) and the Eastern European ones shown as potential senders are effectively net emigration countries. For each space the possible impact of this migration is quite different. In the first case migration is related to the growing population and in particular to the many

31 We must note here that an important part of the migrant in those countries come from Latin America (long distance spatial interaction but short cultural distance). In addition, much of the immigration currently experienced by Spain via the Canary Islands is transitory, with migrants often aspiring to move on to other European countries. This is something that is specifically addressed in the Dublin Convention. (See: Official Journal C 274, 19.09.1996).

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young people without work. In the second case, net emigration correlates more to the low fertility rate and even to decreasing population rates in the case of the Ukraine, which could worsen the demographic situation.

Map 43: Push-Pull Factors in 1999 in Euro-Med Area

Map 44: Net number of migrants in Euro-Med 2000-05

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4.4.3 Migrations toward the ESPON space 4.4.3.1 Historical Migration pattern The migration pattern within Europe and even the migratory flows towards Europe after Second World War can be divided into four phases. The first phase was characterised by “forced migration” as a consequence of the war. The second was more of a redistribution phase as a consequence of differing labour market conditions particularly in respect of the movement from the Southern to the North-western countries in Europe. The slow-down in the European economy also resulted in a slow-down in the demand for imported labour and the labour market related migratory movements began to decrease. As such, refugee migration subsequently increased in importance and, by the middle of the 1980s, labour market related immigration had almost disappeared even if family reunion migration continued to grow. The fourth period was characterised by the migratory effects of the collapse of the Soviet Bloc and the upheaval of the former Yugoslavia. Both cases resulted in significant migratory movements with an impact on the demographic development and the demographic structure in both the origin and the destination countries. 4.4.3.2 Origin of flows toward ESPON Map 45 shows the country of birth of migrants living in the ESPON countries at the end of the 1990s. Migrants have come to ESPON countries from nearly all parts of the World. Only the Central Asian and Central American countries have very low numbers of migrants in the ESPON space, not only because they are not highly populated, but also as the flows of migrants from those areas are probably attracted respectively by Russia and North America. Concerning the flows toward ESPON, two main spaces can be identified as source of migrants: the Maghreb countries (Morocco, Algeria and Tunisia) and Balkan countries plus Turkey, i.e. all countries in very close proximity to the European Union It must, however, be kept in mind that the 1990s was an exceptional decade in respect of upheavals, wars and other catastrophic situations that had impact on these migratory movements. The collapse of the Soviet Bloc and the war and turmoil in the Balkans, which brought about the dissolution of Yugoslavia, were only some of the events that shook the World and resulted in both human catastrophes and increasing refugee migrations. It was, however, not only the turmoil in the former Yugoslavia and the breakdown of the Soviet Bloc that contributed to selective migratory movements. Colonial ties continued to have an impact on the origin and destination of these migrants. This was not a new phenomenon but together with the new migration

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patterns alluded to above it probably accentuated the choice of Western Europe as a destination and more, as the destination for many of the World’s migrants Colonial ties explain the migration from South Asia (mainly towards the United Kingdom), from Southern America (towards Spain and Portugal), and from the Maghreb, Sub-Saharan Africa or the former Indochina toward France.

Map 45: Origin of migrants in ESPON according to their country of birth

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4.4.4: What is at stake concerning the migration flows toward Europe? 4.4.4.1 Migration, the prime driver behind the population change As a consequence of the slowdown in fertility rates – for most of the European countries below the reproduction rate today – migratory movements and then inflows of people have been even more important for population development than before. Many western European countries would have had a negative population development without the immigration surplus. Foreign-born people contribute to the population development in two broad ways – one by immigration and the other by natural population increase. The second can then be divided into two other parts – higher fertility rates among foreign-born women and a more positive age structure from a reproduction point of view. Without migratory flows towards Western Europe the “population crisis” would be even worse than it is today. The continuously rising share of females among migrants also ought to have positive effects on population development. There seems, however, to have been a change in the motives among the female migrants – from being “passive players” accompanying their husbands to a situation where they are now, more or less, migrants on their own account. Increased family reunions have also contributed to this rise in the female share among migrants in the developed countries and the social and economic situation for women with access to significant educational and employment opportunities has also stimulated female migration to Western Europe and Northern America in particular.32 The higher share of female labour migrants may perhaps counteract the effects of family reunification but the rising female share ought to have positive effects on natural population change. So, in this case increased immigration may possibly result in higher fertility rates and a rising population. 4.4.4.2 Territorial polarisation The most accentuated migration pattern is however the huge flows – and then redistribution of people – within Europe, which seems to have a huge impact on the population development and polarisation processes. From other studies it seems obvious that West Central Europe was the “winner” and the peripheral areas the “losers” here.33 These migratory flows from the peripheral areas to the central ones were more often than not characterised by asymmetrical rather then symmetrical flows. This is valid both concerning the amount of people and the structure of the migrants. There are signs that many of the immigrants to ESPON from other parts of the World contributed to the polarisation process while also stripping many regions of highly qualified people. 32 Zlotnik, 2005 33 See e.g. ESPON 1.1.4, “Spatial effects of demographic trends and migration”

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Box 3: Labour Mobility and educational levels No common labour market currently exists at World scale – not even in Europe and its surrounding areas - and there is still a long way to go before this point is reached. This implies, therefore, that the following reasoning will be very hypothetical. According to traditional ‘push-pull’ theories, economic disparities should, in a free labour market, give rise to high migration from the low-income countries to high income ones. This implies that labour surplus and low wages in the developing countries determine migration decisions. Moreover, the high wages in the developed countries further stimulate this labour mobility process. However, according to the segmented labour market theories, these workers are demanded neither in the private nor in the public sectors in the EU. The transformation of the European activity structure in a post-industrial direction has reduced demand for traditional blue-collar workers. Instead, there has been rapid employment growth in the service sectors, especially the upper segments related to the knowledge economy. One result of this transformation process is the looser connection between the business cycles and labour force migration from the second half of the 1970s and 1980s. During these years, migration was a function of political events in other parts of the World and, since the beginning of the 1970s the majority of immigrants have been refugees working in the lower segments of the economy where the educational level is low. The structural transformation of the European economy changed the employment opportunities for immigrants. Instead of blue-collar work in the goods-producing sector, immigrants are now predominantly employed in the lower segments of the service sector. As a consequence of the structural transformation of the European economy, the push factors are now stronger than the pull factors concerning these immigrants. This has also resulted in a change in the employment structure, with a large share of the immigrants working in jobs refused by the domestic labour force – the 3D jobs, “dirty, dangerous and degrading”. Looking at figures 9 & 10 provides evidence that the migratory fields are not homogeneous in terms of the qualifications of the labour force, both in respect of countries of origin and countries of destination. ♦ Concerning countries of destination (B.4) the highest levels of education are

observed for migration toward northern Europe (Sweden, Norway, the UK, Ireland) and to a less degree toward central Europe (Germany, Switzerland, Luxembourg, Slovakia, and Hungary). The lowest levels of education are observed on the contrary for migrations toward south-western Europe (France, Spain, Italy, and Portugal).

♦ Concerning countries of origin (B.5) the highest levels of education are observed for

migrants coming from Asia, the Middle East and Eastern Europe. The lowest level are observed for migrants coming from southern Europe, the Maghreb, the Balkans and Turkey.

This pattern suggests that immigration cannot have the same economic impact in all ESPON countries but that it is important to keep in mind the fact that immigrants does not necessarily stay in their country of arrival and that what is therefore at stake is the elaboration of a global migratory policy at the EU level.

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Figure 9: Repartition of migrants according to their education level and their country of residence in 2000

Figure 10: Repartition of migrants according to their education level and their WUTS of origin in 2000 (neighbouring countries).

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4.5 An attempt to delimit the ESPON 29 “influence area” or “relational networks” in the World The analysis of air, trade and migratory flows presented in previous sections suggests the possibility of identifying a so-called “area of influence” of ESPON 29 in the World as requested in the T.o.R. It also suggests that it is perhaps better to speak of the “relational network” of ESPON 29 in the World and to admit that the results should not necessary be a continuous area organised in concentric circles. This synthetic exercise is based on 4 groups of criteria which try to provide the most complete view in accordance with the statistics available (table 15) 4.5.1 The choice of criteria ♦ Accessibility is a basic condition for the development of relations of any type. But the size

of places is also important in the development of such relations. An important population is

more likely to spread itself across the World (e.g. the Chinese diaspora) than is a small

human group while a large economy is more likely to develop networks of relation all over

the World (e.g. Transnational Firms). We have therefore decided to propose three measures

of potential influence in respect of ESPON 29 weighted by area, population and GDP in 1999.

We have completed these measures of accessibility by the criteria of existence of a common

land border or a short distance maritime border.

♦ Networks define another condition for the development of relations based on the existence

of a common language (official or not) or a common history (ancient or recent). A common

history is frequently associated with former colonial relations with countries which have been

dominated by ESPON 29 states (e.g. France in Africa) or which have dominated ESPON 29

states (e.g. Turkey in Balkans) and is not necessary associated with friendship-type

relations. But, even in the case of conflict, it is a form of knowledge that has been

established between different parts of the World and can be used in current circumstances.

♦ Interactions are effective relations established in the present but also defining further

relations in the future. In terms of “influence”, the simplest way here is to evaluate the share

of ESPON 29 in international air or trade flows of each country of the World. But an

important share is not necessary associated with a high intensity of relations. It is therefore

necessary also to measure the effective influence of flows with ESPON 29 in respect of the

economy (Trade / GDP) or on society (Air flows / population).

♦ Complementarities are both the cause and consequence of flows. The differences in

development measured by the three components of HDI (life expectancy, education and

GDP) and by the level of population ageing (median age) have been introduced as factors

defining different degrees of the structural asymmetry between ESPON 29 and the other

states of the World. We assume that states which are less developed than Europe but with

younger populations are likely to develop fruitful relations of complementarity with ESPON 29

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in the future, which is not true in the case of states with equivalent levels of development

and ageing.

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Table 15: Delimitation criteria for the ESPON 29 Influence Area

CODE Definition Source Year

Weight factor POPTO99 Population, total (inh.),1999, (SP.POP.TOTL) WDI 1999

Accessibility Criteria A_GDP Contribution of ESPON29 to potential of GDP pps 1999 WDI+CEPII 1999 A_POP Contribution of ESPON29 to potential of Population 1999 WDI+CEPII 1999 A_SUP Contribution of ESPON29 to potential of Area WDI+CEPII 1999 A_BO1 Existence of a common land border with ESPON29 CEPII 2000 A_BO2 Existence of a common maritime border with ESPON29 RIATE 2005

Network Criteria N_LA1 Share with ESPON29 at less one common official or national

languages and languages spoken by at least 20% of the population of the country

CEPII 2000

N_LA2 Share with ESPON 29 at least one language (mother tongue, lingua franca or second languages), spoken by at least 20% of the population of the country.

CEPII 2000

N_CO1 Colonizers or colonised by at less one ESPON29 country for a relatively long period of time and with a substantial participation in the governance of the colonized country.

CEPII 2000

N_CO2 idem, but with colonial relations still active in 1945 CEPII 2000

Flows Criteria F_EXP Ratio between observed and expected exportations toward

ESPON29 (under the assumption of random allocation of trade flows according to capacity of import and export of World states)

PC-TAS 1996-2000

F_IMP Ratio between observed and expected importations from ESPON29 (under the assumption of random allocation of trade flows according to capacity of import and export of World states)

PC-TAS 1996-2000

F_AIR Ratio between observed and expected air flows with ESPON29 (under the assumption of random allocation of air flows according to total sum of air relations of each state)

OACI 2000

F_TRA Intensity of trade flows with ESPON 29 measured by the ratio between bilateral trade flows 1996-2000 and GDP pps 1999 (normalised to 1)

PC-TAS+WDI

1996-2000

F_AIR2 Intensity of air flows with ESPON 29 measured by the ratio between bilateral air flows 2000 and population 1999 (normalised to 1)

ITA+WDI 2000

Dissimilarity Criteria

S_LIF Ratio between HDI life component of ESPON29 and HDI Life component of the state

HDR 2002

S_EDU Ratio between HDI Education component of ESPON29 and HDI Education component of the state

HDR 2002

S_GDP Ratio between HDI Economic component of ESPON29 and HDI Economic component of the state

HDR 2002

S_AGE Ratio between median age of population of ESPON29 and median age of population of the state

UNPP 2002

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4.5.2. An index of the global influence of ESPON 29 in the World? A Principal Component Analysis applied to the 18 criteria defined in previous sections has revealed the existence of a 1st Component which is correlated with all the criteria and with the expected sign. This first component thus defines an index of global influence of Europe which is positive for states which (1) have good accessibility to ESPON 29 (2) share a common language and a common history with ESPON 29 (3) are strongly dependant on ESPON 29 for trade and air flows, and (4) are less developed in economic and social terms than ESPON 29 but have younger populations (map 46). Of course, all of the criteria are not necessary fulfilled by any single state but a positive sign on this component indicates that a majority of the conditions are available while a negative sign indicates the contrary. The influence level of the ESPON 29 space is clearly at its maximum value in the Balkans, Turkey, northern Africa and in the north Atlantic (Iceland and Greenland) (table 16). It remains very important in Western Africa and Russia and rather important in the rest of Africa and the Middle East (except for the Persian Gulf). In terms of the medium value of influence, we observe interesting developments in relation to states such as Brazil, India and Iran. In the rest of the World, the potential influence of ESPON 29 is low (South America, Central Asia, the Persian Gulf) or very low (North America, South -East Asia, and Oceania). The minimum level of influence is however reached in Eastern Asia for countries like Japan, China, Korea, Thailand and Mongolia. The use of the word “influence” for the qualification of this index is a little ambiguous as it suggests a relationship of geopolitical domination where several distinctions can be made, for example between ‘hard’ and ‘soft’ power.34 It is certainly true that the strong asymmetries which characterise the relationships between the ESPON countries and the neighbouring countries of Balkans, Turkey and Northern Africa can support this idea of power and domination. Asymmetries can however also be considered as vectors of complementarities and it seems to us better to use the word “functional integration” for the qualification of what is really measured by this index. It is moreover perhaps a little politically incorrect to speak of integration of these new countries into the EU, even if it is from a ‘functional’ rather than a political point of view. Nevertheless, our results clearly indicate the geographical direction that should be taken to further elaboration the Neighbourhood Policy and where those situations where the European Union could perhaps seek to develop stronger partnerships.

34 For an interesting discussion of the similar situation in respect of the USA see J S Nye, Bound to Lead –The Changing Nature of American Power, New York, Basic Books 1991. In particular, note his apposite discussion of the difference between what he terms, ‘hard’ and ‘soft’ power. The former entails getting people to do what you want them to do, while the latter involves getting them simply to want what you want.

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Map 46: Global influence area of ESPON 29 in the World

Table 16: Maximum and minimum values of ESPON 29 Influence

Maximum influence of ESPON 29 Minimum Influence of ESPON 29

Rank Score State Rank Score State

1 9.36 Croatia 1 -3.19 Japan 2 9.12 Iceland 2 -3.14 Taiwan 3 8.90 Tunisia 3 -3.01 North Korea 4 7.93 Serbia/Montenegro 4 -2.85 Korea, Rep. of 5 7.92 Albania 5 -2.46 China 6 7.46 Macedonia, TFYR 6 -2.31 Thailand 7 7.19 Morocco 7 -2.08 Bhutan 8 7.15 Turkey 8 -2.02 Mongolia 9 7.12 Algeria 9 -1.59 Myanmar

10 7.12 Greenland 10 -1.56 El Salvador 11 7.09 Libyan Arab Jamahiriya 11 -1.51 Uruguay 12 6.38 Liberia 12 -1.51 Mexico 13 6.00 Bosnia-Herzegovina 13 -1.46 Australia 14 5.62 Sierra Leone 14 -1.46 Philippines 15 5.06 Russian Federation 15 -1.44 Indonesia

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4.5.3 Heritage as a determinant factor of relations The index of global influence of ESPON 29 in the World was based on the 1st component of a Principal Component Analysis which summarise only 34% of the information on the 18 criteria. The detailed analysis of results revealed the existence of 2 others significant components which reveal different patterns of relation in respect of ESPON 29 with the World which are related to the issue of heritage.

• The exploitation of the Third World countries by European colonial empires clearly defines a second component of the analysis (24% of information) which is characteristic of countries with low or very low levels of development, young populations and common languages with Europe (French, English, Spanish, Portuguese etc) inherited from the colonial period (map 47). This situation is typically observed in sub-Saharan Africa where the official breakdown of colonial links took place very late, after the Second World War, and where the influence of Western European states remained strong even after independence. Indeed, official political domination was in many cases simply replaced by informal political and economic networks of influence which maintained the exploitation of these territories – often termed ‘neo-colonialism’. This situation can also be observed, though to a less important degree, in Southern Asia and in Central and the northern part of South America. In terms of migration this countries are typically potential providers of low-skill labour to ESPON.

• The existence of cultural networks linking Europe with territories

of historical emigration defines the third component of the analysis (12% of information) (map 48). It is characterised by countries which are generally at the same level of development as those of ESPON 29 (North America, Australia, New Zealand etc) or which have experienced important progress in human development and are located around or above the World mean (South America, Southern Africa etc). These countries are no longer ‘dominated’ by ESPON but nevertheless remain strongly connected by common language and common history defining what can be called “cultural networks”. As a result, these countries are actually well connected to Europe by air flows, despite the fact that they are generally located far from the core ESPON 29 area. In terms of trade relations, they are not in the main oriented towards ESPON 29 but they are important partners, generally with a balance that favours the ESPON 29 countries. In migratory terms, these countries are characterised by the movement of a highly-skilled labour force in both directions, from or toward ESPON 29.

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Map 47: The colonial heritage of ESPON 29

Map 48: Cultural Networks of ESPON 29

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4.5.4 A strategic typology of ESPON 29 relations with the World A cluster analysis was then finally applied to the 18 criteria of ESPON 29 relations with the World in order to define synthetic types combining all of the information revealed by the Principal Component Analysis. Seven clusters of states were identified were then rearranged into 4 strategic types for ESPON 29 external relations (map 49). Type A: Functional Integration: This situation is characteristic of those states located in the immediate neighbourhood of ESPON 29 and which share a common terrestrial border (type A.1) or are separated by a very short maritime distance (type A.2). The eastern neighbours (Russia, the Ukraine, Belarus, and Moldova), the Balkan countries (Croatia, Bosnia, Serbia, Macedonia, Montenegro, Albania, and Turkey) and the southern Mediterranean countries (Morocco, Algeria, Tunisia, Libya, Egypt, Syria, Lebanon) are all characterised by a very strong polarisation of their trade and air relations toward Europe, despite the fact that they do not necessary share the same language or the same religion and that they have historically often been in conflict with ESPON 29 countries. According to Bopda (2003) the problem of functional integration is particularly crucial and a source of conflict in this situation where a discrepancy exists between physical proximity and mental distance between social groups. The asymmetry of relations between the European Union and its immediate neighbourhood is a source of conflict but, at the same time, these conflicts are a factor of functional integration in the long run according, for instance, to Simmel’s analysis of the concept of the Stranger. The specific strategies utilised by ESPON 29 in respect of this area are further developed in following chapter. Type B: Historical Responsibility: In the case of the sub-Saharan African countries (except those of the southern part of the continent, which belong to another type); ESPON 29 has a clear responsibility for the future development of this part of the World. In addition to their historical responsibility for colonisation and for the exploitation of the African countries, the ESPON 29 countries also have objective reasons to engage in a strong and voluntary policy of cooperation and development with this part of the World. With a very young population and an important rate of natural increase, the countries of sub-Saharan Africa will increasingly be the main sources of emigration towards the rich and ageing part of the World. The European Union is currently active in developing a strategy of protection against these south-north migratory flows which cross the Sahara and try to reach Europe through the gateways of the Canaries, Ceuta & Mellila, Lampedusa, and Gibraltar. Indeed, this migratory pressure is generally considered a threat, and the northern African countries are more or less obliged to play the doubtful

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role as the border guards or gatekeepers of fortress Europe. In 20 or 30 years however, these countries will probably be engaged on the same path of development as that currently experienced by the countries of northern and southern Africa and, as such, could be among the most dynamic parts of the World. At this moment, where ageing will be generalised all over the World, Africa could become a major centre of World production and its young population will provide many an opportunity. The ESPON countries should not overestimate the strength of their actual influence in Africa and as such could find strategic advantage in the reinforcement of its historical relations with these in a more equilibrious, and fairer manner than was previously the case. Type C. Opportunity: States located at long distances from ESPON but sharing a common language and a common history are particularly important in a global World where services represented the major part of ‘added value’ and where scientific and cultural innovation are a major factor in long term development. Such links are actually well developed with highly developed countries such as the USA, Canada, Australia and New Zealand. But they could certainly be more developed with Latin America (Brazil, Argentina, and Chile), Southern Asia (India, Pakistan, and Bangladesh) and Southern Africa, all of which are particularly dynamic from an economic, scientific and cultural point of view. These emerging states could thus become important partners for ESPON 29 in the World because they are actually relatively independent from the major poles of the Triad and are keen to develop autonomous strategies of development. The European Union is often seen as a model by these countries, in particular in terms of its political construction. Type D. Challenge: States located on a great diagonal running from Sudan to Arabia, Iran, China and Japan define that part of the World where the ESPON 29 countries are significantly less able to have an influence or to easily develop relations because of differences in language, geographical distance, or the weakness of historical relations. But it is precisely this area in which the majority of the ESPON media and, by extension, the policy-makers actually focus most of their attention because of the location here of the most important energy resources (oil and gas in Persian Gulf and Central Asia) and the most dynamic economies (China, Korea, Taiwan, etc). In economic terms, this diagonal is globally in a stronger position than the European countries in respect of most criteria and has a regular positive balance in its trade exchange with ESPON. Both private and public actors from the ESPON countries regularly fight to be present in this part of the World and invest a significant amount to simply be “present”. We have here a major subject of debate inside the European Union because, in the perspective of growing political integration, We can really legitimately ask whether this is really a rational strategy in the long term for European states and companies to invest economically so much in the part of the

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world where they are politically so weak. It probably benefit some transnational firms and financial investors looking for higher profits in the short term, but it is probably not in the interests of ESPON societies to let their resources flow towards an area that will clearly remain outwith their area influence and one which in the main is, or in the future will become, organised and defined by the competition between the other global players (China, the USA, Russia, and Japan).

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Map 49: Typology of ESPON 29 influence in the World

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4.6 CONCLUSION 4.6.1 Towards a strategic vision of the ESPON 29 space in the World? The elaboration of (1) a global index of proximity with ESPON 29 and (2) a typology of proximities linking ESPON 29 with the World will hopefully prove to be a major tool for the development of a strategic vision of the situation of ESPON 29 in the World, ultimately with the potential for it to be applied to many topics (education, trade, research and development etc). As a very simple example of the usefulness of this tool, we will analyse the asymmetry of the trade balance of ESPON29 with the rest of the World during the period 1996-2000. With an annual average of US $690 billions in exports and US $647 billions in imports, the 29 countries of the ESPON area experienced a global deficit of US $42 billions per year during the period 1996-2000. This deficit is primary related to oil and gas imports (which are paid for in US dollars), while ESPON also experiences a generally negative balance with other countries exporting energy such as Russia (US $22 billions ), Libya (US $6 billion), Algeria (US$3 billion), Saudi Arabia (US$2 billion), Iraq35 (US $2 billion), Nigeria (US $2 billion), Iran (US $1 billion) and Cameroon (US $1 billion). The importing of oil and gas are a major concern for European external policy and it is important to observe that the majority of sources of energy for Europe are located in its direct neighbourhood, with a major challenge related to the case of Russia. If we exclude this particular question of energy, we notice however that the balance of trade relations with the rest of the World is clearly influenced by the global factor of influence that we have already identified (Figure 11). A significant positive correlation can be identified between the level of influence of ESPON 29 and the positive or negative equilibrium of trade flows. Countries with high scores of proximity generally have a trade balance in favour of ESPON while the contrary situation is observed for remote countries without important links of any type with the ESPON 29 space, in particular in East Asia and Western Pacifica. The aggregation of trade balances in accordance with the typology of proximities with ESPON 29 (table 17) indicates that the relations with integrated countries (type A) are globally in equilibrium (slightly negative) as the deficits in respect of energy are balanced by the export of other manufacturing goods. In the case of sub-Saharan countries (type B) we can also see a slightly negative equilibrium but with a very low volume of exchange. The countries described as ‘opportunity based’ because of historical links (type C) are the most favourable for ESPON 35 Note, after a decision taken by Saddam Hussein in 2000, Iraq subsequently became the first country to sell its oil in Euros rather than dollars.

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countries which obtains a positive balance with them, primarily related to the good performance in respect of exports to the Americas. The situation is clearly more difficult with countries such as India (type C.2) which currently export more than they import in their trade relations with ESPON 29. In the case of those countries described as ‘challenging’ because of weakness across all forms of proximities (type D) the balance of trade is strongly negative and ESPON 29 records major deficits which are generally not related to the energy market.

Figure 11: Correlation between trade balances and the global influence of ESPON 29

N.B. Countries that are mainly oil exporters are excluded

Table 17: ESPON 29 trade with the rest of the World by type of proximity

Type of Trade flows of ESPON 29 in 1996-2000 Asymmetry proximity (in billions of US $ / year)

with ESPON 29 Import Export Volume Balance /Volume

A : Integration 101 93 194 -7 -4% A1 : Ukraine 67 62 128 -5 -4% A2 : Tunisia 34 32 66 -2 -4% B Responsibility 19 16 35 -3 -9% C : Opportunity 310 364 674 55 8% C1 : India 16 13 29 -3 -9% C2 : Brazil / USA 294 351 645 57 9% D : Challenge 260 174 433 -86 -20% D1 : Vietnam 31 20 51 -11 -22% D2 : China / Japan 228 154 382 -75 -20%

Total 690 647 1337 -42 -3%

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4.6.2 Policy recommendation: Aid Flows and Millennium Objectives Europe has an important external role to play in the world. The Gothenburg European Council of 2001 recognized the external dimension of EU policy and practices as crucial in attaining sustainable development. As the countries of the European Union are included in the developed world, they have a special responsibility to support the further development of the least developed countries (LDCs). They also have a collective responsibility to uphold the principles of human dignity, equality and equity at the local level and in particular to ensure that “globalisation becomes a positive force for all the world’s people”36 The Millennium Development Goals (MDG) (table 18) adopted by the countries of the United Nations in 2000 specifies eight ambitions goals. At present most of them are far from being achieved (UNFPA, 2003). The MDG #8 – “A global partnership for development” – is particularly focused on reforming aid and trade with special treatment for the LDCs and on reducing debt. Thus this final goal can be seen as a one of the means by which all other seven goals could be met. Development aid flows are a pillar of MDG #8 and an area where the European Union has taken on a special role. The European Council agreed, on the basis of a Commission proposal, to double aid to developing countries between 2004 and 2010, and to allocate half of it to Africa. By making this commitment, the EU is likely to reach the UN target of allocating 0.7% of its GNI to development aid by 2015. The EU is well placed for such work as the largest donor of development aid (55% of global ODA), the largest trading partner for the developing countries and a major source of direct private investments.37 4.6.2.1 Making aid flows work In light of the volume of aid flows from Europe to the developing world, international aid, while effective, is also seen as a potential weapon to fight poverty that is “underused, inefficiently targeted and in need of repair” (UNDP, 2005). In order for aid to be effective three conditions must be met:

1) Aid must be adequate enough to spark human development, 2) It must be cost-effective with low transaction costs, 3) Recipient countries must have primary responsibility for its use. Aid must

be untied.

36 United Nations General Assembly resolution A/res/55/2

37 “Towards a global partnership for sustainable development (2002). COM (2002) 82 Final, Brussels 31.3.2002.

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Table 18 : The Millennium Development Goals

Goal Target Eradicating extreme poverty and hunger • Halve, between 1990 and 2015 the proportion of people

whose income is less than one dollar a day • Halve, between 1990 and 2015 the proportion of people

who suffer from hunger Achieving universal primary education • Ensure that, by 2015, children everywhere, boys and girls

alike, will be able to complete a full course of primary schooling

Promoting gender quality and empowering women

• Eliminate gender disparity in primary and secondary education preferably before 2005 and in all levels of education no later than 2015

Reducing child mortality • Reduce by two-thirds, between 1990 and 2015, the under-five mortality

Improving maternal health • Reduce by three-quarters, between 1990-2015, the maternal mortality ratio

Combating HIV/AIDS, malaria and other infectious diseases

• Have halted by 2015 and begun to reverse the spread of HIV/AIDS

• Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases

Ensure environmental development • Integrate the principles of sustainable development into country policies and programmes and reverse the loss of environmental resources

• Halve, by 2012, the proportion of people without sustainable access to safe drinking water and basic sanitation

• By 2020, to have achieved a significant improvement in the lives of at least 100 million slum dwellers

Building a global partnership for development

• Develop further an open, rule-based, predictable, non-discriminatory trading and financial system

• Address the special needs of the least developed countries • Address the special needs of landlocked countries and

small island developing States • Deal comprehensively with the debt problems of

developing countries through national and international measures in order to make debt sustainable in the long term

• In co-operation with developing countries, develop and implement strategies for decent and productive work for youth

• In co-operation with pharmaceutical companies, provide access to affordable, essential drugs in developing countries

• In co-operation with the private sector, make available the benefits of new technologies, especially information and communications

Source: UNFPA (2003) Achieving the millennium development goals. Population and Development strategies n°10. United Nations Population Fund

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Providing sufficient aid to developing countries is obviously not enough. The goals of cost-effectiveness and the ownership of aid initiatives are crucial. The EU, in the 2005 revision of the Cotonou Agreement from 2000 supports initiatives on the untying of aid; in particular in the framework of ACP (Africa, Caribbean and Pacific) cooperation. Tied aid is aid where the provision of supplies and services provided by the donor country is contingent upon the purchase of donor country products or services. Former European Commissioner for External Relations Chris Patten, in a public addressed reiterated: “Tying aid runs counter to the internal rules on the free movement of goods and services”.38 Untying aid would thus boost the effectiveness and impact of EU aid flows. Achieving cost-effective aid with low transaction costs is an unwieldy task in light of the heavy bureaucracy that often characterises some of the governments of the LDCs as well as the donor aid agencies. Corruption within some of the developing country governments and ‘unofficial’ transfers of aid into the informal market is also a risk with poorly managed aid flows. Private aid and remittances from abroad are sometimes seen as a good way to avoid the bureaucratic jungle that can characterise ODA. Many studies have shown that the transfer of money by immigrants from developing countries to Europe is generally higher and more efficient than the official transfer of money from rich to poor countries. The common conclusion is that opening European borders to people from Less Developed Countries may be a more efficient way in which to help them. Alas, this conclusion is misleading: development aid is generally used for investment in infrastructure and social overhead capital, while remittances from family members abroad are used for private consumption and investment in family property. Although remittances are a very important source of capital for developing countries, foreign direct investment (FDI) is still the most important source of capital. Aid, investment, development programmes and remittances are not supplementary, but rather complementary. In practice however it may be difficult to distinguish between private remittances, whether from family members or private donors, and private investment, the fruits of which may not always be transparent in the recipient countries. While private investments certainly have a place in achieving the millennium goals and in encouraging development, it is important to be able to distinguish between investment, trade and aid in order to achieve cost-efficiency and evaluate the impacts of each.

38 Address by Chris Patten, European Commissioner for External Relations. Europe in the World: CFSP & its relation to development. ODI, 7 Nov 2003, p.4

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4.6.2.2 More impact for the money On October 12th 2005, the European Commission adopted a new EU strategy for Africa with several elements focussed on achieving the cost-effectiveness of development aid and enhancing the European-African partnership. Initiatives focus on not only the targets of the Millennium goals, such as health, water and infrastructure, but also on security, peace and good governance. Fighting the “root causes” of the development gap between Europe and Africa stated President José Manuel Barroso, is the only way of addressing problems on the EU territory such as illegal immigration due to poverty.39 In terms of good governance, all aid and development programmes should be enriched with a capacity building element in order to work with local recipient communities in achieving their own Millennium goals. Such aspects of aid should focus on the recipient communities in a true spirit of partnership, with communities having ownership of aid implementation. However with capacity building measures such as increasing transparency of implementation of projects and increasing participation of civil society, perhaps corruption could be better tackled from the bottom up. 4.6.2.3 International migration and the MDG’s International migration is a sensitive subject. Many countries have not been able to agree on the convening of a UN conference to provide guidance to countries addressing the issue of international migration (UNFPA, 2005). Migration is a fundamental dimension of the MDG without being defined as one and the MDG’s, though goals 1, 3, 6, 7 and 8 are connected with it. If they are achieved international migration will be affected. However, the relationship between migration and the MDG’s are complex and multifaceted; the impact of migration on development can both challenge and achieve the MDG’s. Migration can either increase or decrease inequality and poverty depending on the circumstances; migration can also lead to brain drain or brain waste (Usher E., 2005). There is a demand in the developed countries for cheap labour doing the “3D-jobs” (dirty, dangerous, degrading) natives refuse to do. At the same time there is a supply of labour willing to take these jobs, believing that this will lead to a better life. In addition to the fact that migrants end up in the “3D”-sector of the economy, they will also have lower labour force participation rates than natives

39 EurActive.com, http://www.euractiv.com/Article?tcmuri=tcm:29-145748-16&type=News. Accessed on 13 October 2005.

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and face a higher risk of unemployment as they work in a sector which is very sensitive to short-term economic fluctuations (OECD, 2005; Taran P., 2003). Keeping weak economic sectors afloat by using cheap imported labour will counteract a structural change in the economy, which has negative effects on economic and social sustainability (Gaspar et al., 2005). These negative effects hit both the country of immigration (structural change is counteracted) as well as in the sender countries (less remittances). Some scholars in the field argue that there is a temptation to build barriers to migration with the purpose of slowing down or even reversing these population flows. Any such temptations must be resisted at any cost however since they slow the progress of narrowing the gap between the developed and developing countries (Skeldon R. 2005). This appears, however, to be a rather unbalanced picture of the situation; policies built on laissez-faire liberalism are unlikely to solve either the building of barriers or the economic problems of the developing countries. The UNFPA’s Expert Group suggests the following measures on migration and development (UNFPA, 2005).

1. Policies must be formulated on migration and development as very few countries (if any) have them. One consideration in this regard will be ensuring that national development strategies recognize the role of migration. Government must thus work to integrate migration into their poverty reduction strategies, encompassing a wide array of components including: the labour market, health services, and access to health, trade, etc.

2. On migration and the MDG’s, proposals for a set of “minimum common denominators” to measure the progress towards achieving the MDG’s were suggested. Even if the MDG’s make no specific reference to migration, “migration impact statements” could be developed with different follow-up policies envisaged.

3. Despite the progress made in incorporating non-State actors in the migration policy dialogue, this dialogue should be institutionalized so as to occur on a more consistent basis and to ensure their interdependence as important actors in their own right.

4. Young academics in major migration countries should be supported by assisting indigenous research centres, which potentially deliver insights and perspectives that cannot be gained outside the country. Moreover, indigenous research and dissemination can have a positive impact on public opinion by helping to break down negative stereotypes as well as having an impact on policy through reform.

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4.6.3. Promoting a new template for further researches (ESPON II?) To limit the research conducted in the context of the ESPON programme to the EU 29 potentially generates misconceptions and induces mistakes in analysing the main trends shaping the European territory. In many cases, the perception of inequalities, potentialities, polarizations, etc. will be fully transformed according to the geographical shape and the basic territorial units used. It is obvious that the situation of the ESPON area would appear to be very different if the future scenarios included peripheral areas which are strongly related to Europe such as the S.E. Mediterranean countries, or Africa. The strategic vision of the ESPON 29 territory must therefore be approached in a larger Europe. We have chosen a relatively broad definition of the wider ESPON area thus viewing ESPON in its wider context. This broadening eastwards and southwards is based on the analyses produced in this part of the report and therefore on objective criteria showing why taking the Southern and Eastern countries beyond the borders of the EU into account is so important for ESPON 29. One could argue that the Middle East and the Persian Gulf are not particularly well integrated with ESPON 29. In fact they form a second attractive pole in the region that could compete with it. Their integration into the further analysis to be developed here will thus help to promote a systemic point of view of the Euro-Mediterranean region. In what follows, we will build a pan-European template using a special projection that shows all the features of Europe and its close neighbours (Map 50). The projection is centred on ESPON 29 and is enlarged to the South by the North African countries (some of the analyses show a special limit formed by the Sahara borders) and to the East by the Balkans countries plus Turkey, Russia, Azerbaijan and Kazakhstan. The southern and eastern limits are not actually precisely defined. This will depend on the subjects and research results. In addition, the preliminary study on Europe in the World developed in ESPON project 3.1 had shown that the ESPON view was certainly the most interesting one from a short term perspective. But the pan-European view and the global view should be taken into account when European policy-makers try to elaborate strategies in a long-term perspective. The next part of the report (Part C) will use this template to review the European neighbourhood relationship and its institutional instrument the European Neighbourhood Policy Instrument.

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Map 50: The Euro-Mediterranean template

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5. Part C: ESPON in its ‘neighbourhood’ 5.1 Introduction; two European regionalisms Regionalisation is the dominant form of globalisation, for two reasons. Firstly, the enlargement of exchange scales provokes global flows but above all enhances all types of exchange between a nation-state and its bordering areas. Firms find many interests in locating in more remote but dynamic areas. They also find it very convenient to « near-shore » too. In this respect, the EU building process is one of the numerous regional processes that are being energised by globalisation (figure 12). The strategic advantages of proximity are growing as the oil price rises and travel and transportation costs thus rise also.

Figure 12: Share (%) of intra-regional trade in total trade of each grouping

Secondly, the need to re-balance or re-regulate the World economy is an important driving force here in response to the excesses of the era of borderless or ‘footloose’ capitalism. Of course some rules have been implemented at the global scale such as those on trade (WTO). However, the failure of the WTO’s Cancun meeting concerning the Doha programme and the Millennium goals, the failure of the Kyoto’s agenda, and the lack of common global legislation on

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labour or public health shows how difficult it is to regulate the wide World. The regional scale however can be seen as more relevant for the introduction of new public policies, due to the complementarities between the national economies concerned, common environmental stakes (pollution of rivers, seas and air), shared cultural values – or at least an understanding of each other’s cultural values, historical links, migratory flows, and any other assets important in creating win-win co-development. This is why regional trade agreements have multiplied worldwide in the last fifteen years, and why existing agreements have been re-invigorated with new environmental or social concerns, and why new ones are being formed to include developing countries. UNCTAD (2005) counts more than 200 such Regional Trade Agreements40 and states that regionalism is becoming an active interface vis-à-vis the globalisation. This regionalisation response occurs in two different ways. Type I is what could be called “convergence regionalism”: it sees the gathering together of comparable countries, its main goal is convergence, and it is promoted mainly by States, through public policies. The European Union is the principal example of this type of regionalisation. In the developing World, MERCOSUR provides another example. Type II relates to “North/South regionalism”. This type gathers together uneven countries, its main goal is economic development it is mostly promoted by private firms, with ALENA being the main example here. The growing association between ASEAN and North-Eastern Asia (“ASEAN Plus Three”: Japan, Korea, China) is another relevant example. The December 2005 Kuala Lumpur Summit enhanced the notion of an “East Asian Region” or “ASEAN Plus Five” since Australia and New Zeeland attended the Summit and discussed their participation. This ‘type II’ form of regionalisation presents much better results than traditional ‘type I’ regionalisation when it comes to employment and the economy. The reason being that it is based on the complementarity between rich countries with a great deal of capital, technology and ‘know-how’ on the one hand, and developing countries with rapidly growing markets and large – increasingly educated – labour forces (dramatically lacking in Japan or Europe) on the other. For instance, since the beginning of the NAFTA agreement, Mexico has significantly increased its exports to the USA (and even to Canada), and now benefits from a positive trade balance. The country is now regarded as a “Northern country” by investors and it thus now benefits from a significant inflow of FDI. There is, moreover, no need to provide any proof about the economic dynamism of Eastern Asia, while it is undoubtedly the case that the Japanese recovery since the beginning of the 2000 is partly due to its increasing North-South integration.

40 Unctad, Mina Mashayekhi & Taisuke Ito, ed. 2005, “Multilateralism and Regionalism. The New Interface”, Unctad, New York and Geneva.

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The goal for European Union then is to take this North-South regionalism step. The European Union has plainly already derived most of the advantages it is likely to make from type I regionalisation. It has taken advantage of its enlarged territory, by extending market forces eastwards. But (i) it is well known that the main opportunities for new workers and markets are located beyond the New Member States and in particular on the Southern shore of the Mediterranean. (ii) These neighbours already have many links with the EU, they interact economically, politically, socially, and demographically, there is however a strong need to regulate such links. This is the reason why it is of utmost importance to distinguish between the two notions of “Europe”:

- The first notion is the institutional one. “Europe” means the EU (ESPON, in a wider sense). Its borders are established, not necessarily forever (Romania, Bulgaria and Croatia should enter in 2007, perhaps the rest of the Western Balkans and Turkey later on), but at any time they are precisely defined.

- The second one is that of what we may call the functional “Europe.” This means the Euro-Mediterranean (Euro-Africa in a wider sense) which is the socio-economic region in which ESPON is embedded. We have seen in the conclusion of part B of this report that its geography is unclear; its borders vary according to the index one uses (very large when it comes to commercial trade, closer when it comes to sea pollution). But in any case its dimension is broader than the institutional definition of the EU and ESPON. The geographical difference between the two definitions is the “neighbourhood” which covers the integrated area defined as type A (integration) on map 49.

The questions this chapter addresses then relate to how these two definitions of Europe deal with one another. Should the EU seek to increasingly integrate its neighbourhood, or will cultural differences mean that we are likely to experience a growing divide? Is the answer the same on the eastern and on the southern borders of the EU? How does this regional relationship impact EU territory? Does the European Neighbourhood Policy (ENP) adequately cope with these high territorial stakes? What about future Interreg programmes? This chapter assumes a definition of the Euro-Mediterranean which covers WUTS11 (Europe and Northern Asia) and WUTS12 (Southern Mediterranean and Western Asia) with eventually the northern margins of WUTS13 (Sub-Saharan Africa). It shows how the neighbourhood impacts European territory (case studies illustrate the cross-border integration issue), while outlining what the main territorial stakes of regional integration are (C.1). It raises the issue of the form of the territorial contact (smooth transition or brutal discontinuity) between

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the ESPON space and its neighbourhood (C.2). It argues that while there is not yet in place a common regional production system beyond the ESPON countries, nevertheless, many flows associate the ESPON space with its surrounding countries (C.3). Our policy orientations (Conclusions) highlight the way in which the ENP could help the European Union to achieve North-South regionalism, highlighting the role that DG Regio’s regional policy has to play in this process. 5.2. How the neighbours impact ESPON territory 5.2.1. Neighbours’ weight The oil and gas stake tells us how much Russia impacts the European economy and territory. The Ukrainian desire for European membership is backed by Poland. What is less known, is the importance of our southern neighbours. They are reported to have weak economies, significant labour forces but limited since they entered into a period of demographic transition. Indeed it is often perceived that they are likely to provide Europe with more trouble than with resources. The available statistics however do not agree. From now until 2025, their population will rise from 240 to 340 millions when it comes to Mediterranean partners and from 380 to 540 millions when it comes to the whole Middle East and North African (MENA) area (Morocco to Iran, Afghanistan excluded). Meanwhile the whole “European” population (ESPON + the Balkans) will only increase from 513 to 515 millions. Europe’s (ESPON + the Balkans) current share of World GDP (PPP) is a little more than 20%, the MENA region weighs almost 5%, which is not inconsequential in global terms. The aggregated economy of the Southern Mediterranean countries, from Morocco to Israel and Turkey, is thus much larger than that of the ten New Member States (NMS’s), and almost as large as that of Russia and Ukraine altogether. The economic annual growth of the MEDA41 countries reaches 4 or 5%: this is not enough for their employment needs but it is much more than ESPON (map 27). Last but not least, the Euro-Mediterranean area (ESPON + Eastern and Southern neighbours) is certainly the most complementary and historically the most inter-linked among all of the major regions of the World (see map 46). The bilateral intensity of the trade exchanges of each neighbour defines a region polarized by the ESPON space. The Commonwealth of Independent States (CIS) countries have a high intensity of exchanges with other CIS countries and secondarily with Central Eastern Europe countries (CEE). The Maghreb countries have a high intensity of exchange with the EU (map 51). The East Mediterranean countries have a lower intensity of exchanges with Western Europe and a higher

41 Morocco, Algeria, Tunisia, Egypt, Jordan, Palestine, Lebanon, Syria, Turkey

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one with the Near and the Middle East. The role of the ESPON space comes from the fact that, contrary to what occurs inside the CIS, the Mediterranean neighbours show a low intensity of exchanges between themselves, especially between the West and the East of the Mediterranean Sea. Inside the ESPON space, interfaces with the neighbours appear clearly: European Mediterranean countries have a high intensity of exchanges with their Mediterranean neighbours; CEE countries and Finland with one or several CIS countries.

Map 51: Imports and exports of EU’s neighbours.

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Map 52: Bilateral intensity of the Russian trade

5.2.2 Territorial stakes and recent impacts on ESPON territory Unemployment (how to attract eastern and southern elites without provoking a ‘brain drain’), the regionalisation of production process (how to develop a ‘win-win’ regional division of labour that would benefit from the North-South regionalism pattern), energy (how to secure the European oil and gas procurement from the Arab countries and Russia), environment (how to reduce the pollution of rivers, common seas and air in the region), and security (how a common border management regime can ensure stabilisation for both the EU and its neighbours) - these are some of the major issue in the Euro-Mediterranean region The way in which these issues are dealt with or resolved will have a major impact on the ESPON space. Paradoxically, since the collapse of the socialist block the Russian Federation has tried to entertain direct relations with Western Europe, without passing through its neighbours’ territory (Box 4). For its part, during this period Romania faced a complicated situation relating to its ‘in-between status due to the delay in its accession to the EU (Box 5). The situation in the Balkans provides another example of the impact of neighbouring political contexts on the ESPON territory (Box 6).

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Actual or potential impacts are even larger to the south. Almost all of the Mediterranean neighbours face high rates of structural unemployment, due to their economic structures, their lack of economic reform, the need to modernise their agricultural systems which will have severe effects on employment, and the persistence of numerous internal and external conflicts. In addition, they also face growing competition from other developing countries (e.g. the entrance of China into the WTO, and the dismantling of import quotas in the textile industry, etc). The EU has a vital role to play here however. Firstly, the EU must help its neighbours to create a reliable legal background for investments in order to help in the creation of the thousands jobs urgently needed. Otherwise, a continuing flow of undocumented immigrants will turn ESPON’s borders into ramparts. Secondly, the EU will increasingly need labour force recruits in order to compensate for its demographic decline and labour force shortage. This labour force could in large part be taken from the neighbouring countries. As noted previously however, the need to avoid a ‘brain drain’ that deprives the EU’s neighbours of their local development base is fundamental here. The lack of a common policy framework, particularly in respect of teacher training, prevents the southern neighbours from tackling the huge increase in new students that confronts with. Trans-Mediterranean cooperation in training is developing, especially in Spain, France, Italy and Greece, and could become a significant industry in these areas. The political path is important, though the institutions designed to deal with it, namely, the ‘Barcelona process’ regime has faced significant difficulty in engineering a consensus. The issue of a regional production process is central to ALENA42 and East Asia43. As section C.3 shows, a genuine division of labour is developing between the western and the eastern parts of the European continent, and this is extending to the eastern new member states. What is lacking however is a trans-Mediterranean division of labour, which would locate some of the activities of European firms, and a higher part of the value chain, on the southern shore of the Mediterranean. Of course this would provoke problems on the northern shore because of the loss of unskilled jobs. In any case however these types of jobs are already leaving Europe. Building a coherent region would however alleviate the shortcomings of such a delocalisation.

42 See Martine Azuelos, Maria Eugenia Cosio-Zavala & Jean-Michel Lacroix ed, 2004, Intégration dans les Amériques, dix ans d’Alena, Presses Sorbonne Nouvelle. 43 See Heribert Dieter, ed., 2006, « Report on East Asian Integration », Studies & Research n°47, Notre Europe.

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One of the most relevant examples of this ‘win-win’ need for a regional production process is agriculture and the food industry. The current situation is suboptimal. Some typically southern products such as citrus fruits or olive trees are also produced along the northern shore, while some typically northern products such as wheat are produced on the southern shore. In Morocco, 1.3 out of the 1.4 million agricultural farms produce wheat, most with incredibly low productivity and small profit margins. The inescapable downsizing of agricultural subsidies, on both shores of the Mediterranean Sea, will moreover see this situation progressively worsen. The winner however will be neither the Northern nor the Southern shore of the Mediterranean, but rather Chile, Australia or California all of which are currently industrializing their food production industries. What has to be done then is a rational re-location of production within the Euro-Mediterranean area, the development of the food industry related to these products along the Southern shore, and the common promotion of regional Mediterranean products. Actual trends as well as possible common responses to the challenging nature of international competition will have an increasing impact on the rural areas of both shores of the Mediterranean. Highlighting the necessity of an overall regional view would help in the modernization of the Common Agricultural Policy, especially its second pillar (rural development) in the framework of the ENP. Several environment issues also have a regional dimension. These include, the pollution of common seas (Black and Mediterranean Seas, for which, pollution was one of the main issues of the November 2005 Barcelona Euromed Summit); air pollution, nuclear risks (relating to the upkeep of the antiquated power-plant stock in the East and the potential building of new plants in the Mediterranean (potentially in Turkey after 2010). Many actions already link the two shores of the Mediterranean. When it comes to pollution for example, the UNEP Map (Mediterranean Action Plan) has its headquarters located in Athens and is networking with the main Mediterranean cities on both shores. Moreover, the professional and intellectual bases for a regional partnership on the environmental issue already exist; what is at stake is the need to achieve the final operational step. European Mediterranean actors such as local firms, local authorities in the context of decentralised cooperation, and NGOs, have a lot to do in this regard. 5.3. Continuity and discontinuity, eastward and southward 5.3.1: A methodology for discontinuity and border analysis The research developed on the measurement and cartography of territorial cohesion in the ESPON programme (ESPON 3.1 Final Report, ESPON 3.2 Second Interim Report) has established that the spatial organisation of

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heterogeneity is a crucial output for territorial planning. The global measures of regional inequality derived from statistical parameters (coefficient of variation) or economic models of equilibrium (Gini coefficient) do not take into account this spatial dimension of heterogeneity and are therefore blind to the potential consequence of proximity between regions of different levels of development which can define either regular gradients (if the transition between different levels is smoothed) or a homogeneous area separated by territorial discontinuities (if the transition is abrupt between groups of regions of different levels). This regional pattern raises the question of integration: is the ESPON space and its neighbours truly integrating, are they converging or diverging? It also provides some input into the (false)44 problem of the limits of Europe: is it possible to identify precise limits where economic and social criteria are characterised by abrupt changes? Or rather can we detect a kind of “smoothed” transition between the core of Europe and its margins? Our answer to this question is firstly based on a benchmarking of the contact between ESPON 29 and its neighbours to the East and the South based on the evolution of GDP/inh and life expectancy at birth between 1950 and 2000. As we do not want to predefine in any way the limits of Europe, we have built “cut-lines” which cross ESPON 29 territory in West-East and North-South directions and which define samples of states linked by relations of contiguity (land border or short maritime distance) (map 53). ♦ The WEST-EAST sample goes from Ireland to the Ukraine through the UK,

France, Belgium, Luxembourg, Germany, Austria, Hungary, Romania and Moldova.

♦ The NORTH-SOUTH sample goes from Norway to Niger through Sweden, Denmark, Germany, Switzerland, Italy, Malta, Tunisia, Algeria and Mali.

Map 53: North-South and East–West samples of states used for the visualisation of discontinuities

44 In a speech entitled, “A Wider Europe – A Proximity Policy as the key to stability”, given in Brussels on 5th December 2002, then Commission President Romano Prodi first publicly expressed his notion of ‘sharing everything but institutions’. This seemed to offer a kind of ‘functional’ integration to the countries on the borders of the EU while, at the same time heading off the question of further enlargement. As such, the notion emerges that ‘political enlargement’ alone, in the traditional institutional sense, may not be the only future option being considered in context of the rather vexed question over the ‘limits’ of Europe.

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The “cut-lines” presented below are useful tools in the visualisation of territorial discontinuities because they provide a very intuitive picture of spatial homogeneity, gradient or discontinuities. The reader should however bear in mind that these samples are not necessarily fully representative of all of the possible forms of contact between ESPON 29 and its eastern and western neighbours and that they should rather be considered as archetypes in Max Weber’s sense. A complete spatial vision of discontinuities can be obtained through maps of discontinuities. This spatial vision has to be combined with a dynamic vision (evolution of discontinuities through time) and a cross-thematic approach (discontinuities for different criteria) developed in volume II of this FR. Last but not least, the analysis of discontinuities should not remain an abstract mathematical exercise but should rather be grounded on concrete examples of the effects of discontinuities in terms of induced flows. Several case studies on the border regions of ESPON 29 have thus been elaborated which are presented in volume III of this FR and are summarised here in short boxes. 5.3.2. the West-East “stair gradient” Thanks to German reunification and the recent enlargement of European Union in an easterly direction, the differences between countries and regions are relatively smooth and gradual in term of most criteria when going from Western Europe to Central Europe, Eastern Europe and Central Asia (figure 13). Of course, very abrupt differences remain along some borders in respect of some criteria (particularly in terms of economics). Discontinuities are not however observed

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for all criteria and the spatial transition between high and low levels of development is generally sufficiently gradual to limit the formation of global territorial discontinuities. The main trend then appears to be a “stair gradient” with 3 of 4 levels of decrease, which means that each group of states located in the intermediate levels is at the same time attracted to their western neighbouring upper level and attractive for their immediate eastern neighbouring level. For example, Hungary is attracted by Austria but is attractive to Romania which is attractive for Ukraine and Moldova. The potential flows induced by the “stair gradient” organisation are potential vectors for a diffusion of prosperity and development from West to East. This potentiality will not necessarily be realised easily while political and economic conflicts are likely to develop if this diffusion of prosperity is only realised by market forces beyond political control (migration of people from east to west, relocation of industrial plants from west to east). Gradients can indeed be used by criminal organisations (the trade in people-trafficking, money laundering and sex slaves, as well as human organ-donor traffic) or cynical policymakers and private companies (transfer of environmental damage to the poorest countries). The European Union clearly has a very important responsibility in the organisation of this “stair gradient” and can use many political instruments for this purpose:

• Extension of cooperation areas of the Interreg Programme in a West-East

direction in order to efficiently cover the most important axes of the “stair

gradient”.

• Clever regulation of flows induced by discontinuities in order to limit the

negative effects of asymmetric relations without limiting the positive effects of

social and economic convergence induced by their development.

• Strong control of criminal activities or other undesirable speculation that can

be induced by the opening of borders in areas affected by discontinuities.

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Figure 13: Discontinuities between ESPON 29 and its eastern neighbours

The three case studies presented in the following pages help to clarify some of the concrete effects of this particular spatial organisation of the eastern gradient.

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Box 4: The new EU border in Hungary. Asymmetric relations with Romania and Serbia

The post socialist reforms have affected the cooperation of Hungary and Romania at all levels. These relations are mainly based on an asymmetric pattern. For instance, since the middle of the 1990s, Romania has been one of the favourite destinations of Hungarian direct investments, particularly in regions inhabited by ethnic Hungarians and in Bucharest. But the contrary is not true. Besides, in spite of the improvement in relations between the two countries, the Eastern regions of Hungary are often bypassed. They do not take advantage of the proximity of Romania. This low level of attractiveness of eastern border regions, except for some illegal seasonal workers employed in agriculture, is not likely to change in the near future. Migration flows from Romania to Hungary are strong whereas the contrary is not true. Most of the Romanians primarily choose to settle either in Budapest or in Western Hungary. At the local level, a special effort has been made by the governments and local authorities to improve the legal framework of the cross border cooperation, to establish Euro-regions, small organisations and even the twinning of cities. The recent accession of Hungary to the EU had unwanted effects. Taking advantage of the very low cost of labour in Romania, many foreign investors who had previously settled in Hungary decided to relocate some of their manufacturing plants to Romania. These investors are also interested in Romania as a growing market. This process is enhanced by the legal context in Romania where FDI is more secure thanks to Romania’s EU accession strategy. Relations with Serbia-Montenegro, namely with Voivodina, are different. The close relations that had been established in the 1970s and 1980s between Yugoslavia and Hungary were disrupted by the war. Southern Hungary directly faced up to the consequences of the civil war in former Yugoslavia, with a massive inflow of refugees coming mainly from Serbia during 1993, with dramatic economic consequences. The gap between levels of development on both sides of the southern Hungarian border is more dramatic than along the Hungarian-Romanian border. But the accession of Hungary to the EU has had a favourable impact on relations between the two countries. (i) Many issues of common interest have been approached with a higher degree of responsibility and with a European consciousness. (ii) Because of accession, Hungary has been obliged to introduce a strict regime for entering its territory and has adopted the Schengen border regulations, while trying to make its migration policy go along well with the necessity of maintaining the network of relations with Hungarians living abroad. (iii) Cross border cooperation programmes have been launched in various fields (migration, environmental cooperation etc). Other projects have not yet been successful, though the regional political context is more favourable than previously. In spite of the dramatic improvement in relations with Serbia, bilateral exchanges have not increased as rapidly as they could, while the cross border cooperation suffers from the absence of a relevant regional-local level in the public administration on the Yugoslavian side. Although there is an obvious readiness to carry out real cooperation projects, large scale concrete achievements remain elusive.

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Box 5: Russia and the Baltic states: the various scales of a difficult relationship

Since the 1990s, the relationship between Russia and the European Union has developed apace, particularly in terms of trade relations (not only because of oil and gas). Russia is becoming increasingly integrated into the European economic region, but remains reluctant to receive too high a level of foreign direct investments. The FDI flows represent a low percentage of the Gross Fixed Capital Formation. At a lower level, the evolution is not the same. Almost all of the CEE countries still have a high bilateral intensity of trade with Russia but their trade relations (mainly their exports) with the Federation have dramatically decreased since the 1990s for various political or economic reasons. In the case of the relationship between Russia and the Baltic states, with the exception of Lithuania a strong barrier effect exists. The most striking evolution has taken place between Russia and Latvia whose external trade has steadily grown with all its European partners while decreasing with Russia. The evolution is roughly the same for Estonia. The inward stocks and flows of FDI have increased significantly in Estonia and Latvia while the Russian share has remained very low. Estonia and Latvia have totally shifted the orientation of their economic relations to the West, namely to the Baltic region (Finland, Sweden, Germany). The decreasing flow of exports to Russia is a consequence of the great changes that have taken place in the economic structure of the Baltic States and poor political relations with Russia. The Baltic States no longer play their traditional role of providing an interface between Russia and the rest of Europe. To a certain extent, they have been bypassed.

At the local level, cross border cooperation between Latvia and Estonia on the one hand, and Russia and Belarus on the other, has not made significant progress since the end of the 1990s, although administrative procedures were significantly improved in 2001 and 2004. Russia’s central government is reluctant to encourage such cooperation projects. Cross border relations roughly follow the same evolution with Belarus. Such economic and political evolutions have consequences on the Baltic States’ territory. The lack of permeability across the border contributes to the poor social and economic performances of some regions in Estonia and Latvia, especially those located along the EU’s external border. The inauguration of ports such as Primorsk and the construction of a gas pipeline through the Baltic Sea illustrate well the policy followed by the Russian administration. In 2002, Transneft (Russian pipeline monopoly) decided to stop the crude oil transit coming from northern Russia to the port of Ventspils through Latvian territory. This decision had serious consequences for the energy supply in Latvia, and caused a major economic loss for the port of Ventspils which lost one third of its traffic in 2003. Latvia has a declining relationship with Russia, Belarus and the rest of the World (see Figure 14); Belarus has imported almost nothing through Latvian territory since the second part of the 1990s. Meanwhile, the cargo Latvian transit traffic from and to the other Baltic States has regularly increased since 1999, which suggests a rapid Baltic sub-regional integration. By the end of the 1990s, economic crisis in Russia had had an impact on Eastern Europe. Combined with the implementation of tariff barriers, the abrupt fall in Russian demand caused losses for many firms located in Central and Eastern Europe. This had a negative impact on regions whose trade is mainly oriented towards Russia, among which for example was the region of Narva in North Eastern Estonia. All social and economic indicators in this county are now far below the national average; North Eastern Estonia reports the lowest GDP per inhabitant since 1998 and the highest unemployment rate (Unemployment rate of Estonia’s counties, 1997 to 2004).

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Figure 14 : Evolution of transit traffic in Latvia.

The economic situation of the border regions located in neighbouring countries can burden the performances of the EU’s peripheral regions. The impoverishment of Russian and Belarusian regions such as Pskov or Vitebsk oblasts, hampers the development of their counterparts located in Eastern Latvia and Estonia, except those where there is an important urban centre (Tartu). While the capital regions of the Baltic States are now increasingly EU oriented, the Eastern regions are left without any opportunity to cooperate with bordering regions. Furthermore, Russia and Belarus have undergone a strong process of re-centralization since the mid-1990s. This further hampers cross border cooperation because Russian and Belarusian border regions do not have any autonomy in the field of external relations.

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Box 6: The case of Romania: an “entre-deux” space

Romania, which will achieve full membership in 2007, is an “entre deux” space, in which the external forces, generally in competition, have always counted for more than internal ones and have reinforced or created ancient regional internal cleavages. Romania is a relatively new State based on a recent territorial settlement; it displays many of the features of a certain type of modernity based on European concepts and values, temporarily displaced by the values of the communist model. This “entre deux” situation may finally however have positive effects, helping Romania to find efficient and original solutions to problems such as inter-ethnic relationships, the regulation of migration flows, rural-urban and regional-national-international relations. Romania is now in the core of the potential relational field between East and West. This “entre deux” situation has territorial consequences, as can be illustrated in what follows. (i) As far as migration flows are concerned, the central and east European space shows dual features (dual gradient of development for example at the national and infra-national level from West to East). Such a space functions (simultaneously) in a similar manner to that of a periphery and as a core area: Western regions attract people coming from Eastern ones. (ii) The diffusion of innovations in space is shaped by this East-West pattern. The western regions of Romania have more rapidly responded to the economic stimuli which came from abroad (together with the region of Bucharest). (iii) The investments made by foreign actors reveal different spatial strategies, based on the search for absolute or comparative advantages offered by some regions. These foreign investment flows strengthen regional disparities. Most of the foreign firms are concentrated in the Western part of Romania, in Bucharest and its region and in the region of Constanţa. The southern and north-eastern parts of Romania do not attract such amounts of FDI because their nearest neighbourhood is composed of the poor regions of Moldova and Bulgaria. (iv) The pre-accession process has enhanced the attractiveness of Romania as an FDI target and increased the presence of EU investors, while investment from the USA has declined. Asia, too, is a growing factor in these FDI flows. Middle-Eastern investors supply only a minor part of the FDI stock but their share in the total number of firms, totally or partially based on foreign capital, is quite high, revealing strong relationships between Romania and the Middle-Eastern countries. (v) The dynamics of external trade also shows a strong East-West pattern revealed by huge regional differences in the customs’ organisation. The western part of Romanian border has five regional custom divisions while the eastern part, where trade flows are negligible, has only one.

Figure 15 : The territorial organization scheme in Central-east Europe

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Figure 16 : Romania at the core of the Euro-Asian peripheries

From a demographic point of view, Romania stands at the crossing point of forces generated by the great assembly of population from the Central Europe, Turkey and that of Moscow/ Sankt Petersburg, and the western Ukraine. Described by the interaction potential between the populations localized in the cities with over 50,000 inhabitants from the given space, these fields of forces represent, in fact, potential waves established between the three great demographic assemblies/clusters.

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5.3.3 The double North-South discontinuity The spatial organisation of north-south discontinuities is different and it is based on different criteria not perceived in the same way by the majority of European policymakers (figure 17). Contrary to the opinion of the majority of ESPON members (see the results of the survey on the ESPON vision of the World) the Mediterranean Sea does not represent a line of abrupt discontinuity for all criteria. If we consider for example the social criteria of life expectancy at birth in 1995-2000, we observe a relatively gradual transition between countries located on a north-south axis from Italy (78 years) to Malta (77) Tunisia (72) and Algeria (69). It is only when we arrived at the sub-Saharan countries that an abrupt line of discontinuity appears with Mali (47) and Niger (43). This is a rather new situation as compared to that of the 1950’s where the Mediterranean Sea did indeed act as the borderline for such extreme differences - Italy (66), Malta (66), Tunisia (45), Algeria (43) - and where sub-Saharan countries where not so different from northern ones – Mali (32), Niger (36).

The situation in respect of discontinuities is a little different in relation to other criteria such as education levels or GDP per capita but, in every case, we can observe a spatial configuration of double lines of discontinuities: the first located on the Mediterranean Sea and a second one on the Sahara desert. This spatial configuration of double discontinuities means that the North African countries actually function as a “buffer zone” or “shatter-belt”, which is in a sense comparable to the situation of new member states at the end of the cold war and which is similar to the actual situation of Bulgaria and Romania (See Box 6) The great difference between the semi-peripheral regions of the Southern Mediterranean states and those of Eastern and Central Europe is however, in part, to be found in the globally negative perception – or lack of perception – of the potentialities of this area by the majority of European policymakers. The demographic situation and also potential for economic dynamism of those countries located on the southern shore of the Mediterranean Sea may actually provide a major development opportunity for both the European Union and the countries of the Southern Mediterranean. Moreover, some kind of long-term ‘engagement’ here is probably the only possible way for the EU to maintain its situation as a global actor at World scale.

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Figure 17: Discontinuities between ESPON 29 and its southern neighbours

The consequences of this double discontinuity to the south are crucial for many topics. The case study on Morocco presents the effects of this particular structural situation on migratory channels and paths toward Europe (Box 7). But the challenge of north-south relations is much wider and can be illustrated by the Lisbon Strategy policy recommendations presented in the conclusion.

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Box 7: Mobility between Morocco and Europe: a common subject of concern.

About 7 million migrants came from Africa to the OECD countries in 2003 and 3.2 million from Northern Africa. A large majority of them migrate in order to find work. These migrants are traditionally highly concentrated, with 94% residing in 10 countries, especially in Western Europe. This is the case for Morocco. In the 1990s, more than 80% of the Moroccans registered in Moroccan consulates abroad lived in Europe, 12 % in Arab countries, 5 % in North and Latin America…

Map 54: Number of Moroccan citizens listed in consular services abroad in 2004 – (in Euro-med region).

However migration flows from Morocco are becoming increasingly globalized. Europe continues to be the main destination because Spain, Italy and Portugal are becoming increasingly attractive. But the relative importance of traditional destinations such as France, Belgium, Germany, the Netherlands and even other Arab countries is decreasing. More and more migrants choose Northern America, especially highly educated ones. In addition, the migration flows from Morocco are increasingly diversified, while the numbers of students, highly educated workers and women are increasing. Of the total number of foreigners studying in the European Union, Moroccans are the most numerous. In addition, although authorized migration is more difficult, flows have actually increased because of the development of illegal migration. According to various estimates, 100 000 Moroccan illegal migrants leave the country each year.

Map 55: Variation in the number of Moroccan citizens listed in consular services abroad, by country, from 2002 to 2004.

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Morocco is not only a country of origin for international migrants. It is increasingly also a country of transit. It has become an interface between Europe and Africa. Indeed, migration flows from Moroccan have stagnated since 2002, while the migration of sub-Saharan people trying to reach Europe has increased significantly since the middle of the 1990s. Migration flows are a major subject of concern for both the Moroccan authorities and the European Union. Efficient cooperation between Morocco and its European counterparts in this area has emerged only recently. Morocco has made significant progress and has dramatically improved its obsolete legislation (bill n° 02-03 passed in 2003). Its laws are now more in line with various international conventions. But to fight efficiently against illegal migration is expensive and up to now, the Moroccan government has lacked sufficient financial support.

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5.3.4 Internal discontinuity: the case of Switzerland and Norway

Discontinuities are not only localised at the periphery of the ESPON territories. As such, it is important to mention the cases of Switzerland and Norway which are not members of the European Union and, despite significant integration in the context of the EEA agreement (Norway) and the EU-Switzerland bilateral agreements, remain relatively different in terms of regional development.

Box 8: The European policy of the Swiss federal council

In 2001, the Federal Council reaffirmed the key elements of its European policy after the rejection of the popular initiative "Yes to Europe!", which was intended to oblige the Federal Council to open immediate negotiations on EU entry: • in the short term, the implementation of the seven bilateral agreements, their extension to the ten new EU Member States and the conclusion of the second series of negotiations are the top priority. • in the medium term, priority will be given to obtaining approval of the second series of agreements by the Federal Assembly and the Swiss people and their subsequent implementation. • the longer-term aim of the Federal Council’s European policy is to take Switzerland into the European Union. The Federal Council is convinced that in the long-term Switzerland can better safeguard its interests within the EU than outside it. Today, many problems can no longer be resolved through the lone actions of individual states, but only in acting together at European level. The continuation of the existing pragmatic policy of small steps with all its known advantages and drawbacks is less an integration policy option as far as the Federal Council is concerned, than the expression of a reality which remains valid until the policy change, which the Council seeks, finally comes about. Accession of Switzerland to the European Union would be compatible with the Federal Constitution. (Article 89 of the Federal Constitution, which requires a popular and cantonal majority for such a decision, was revised in 1977 precisely with a view to EU accession). If Switzerland became part of the EU, the Swiss people and possibly also the cantons could continue to exercise the people’s rights embodied in the Federal Constitution (referendum, initiative). However, the outcome of a referendum must not be allowed to influence obligations arising under the treaties establishing the Communities. Studies by various Swiss universities have shown that, had Switzerland already been an EU Member since 1993, the number of concrete conflicts between Community law and referendum proposals at either Federal level or voting procedures at cantonal level would have been very small. In prosperity terms, the following summary conclusions can be put forward: · thanks to EU accession, future economic growth of Switzerland would tend to be higher although this growth would also depend significantly on other factors such as internal reforms; · EU accession would exceed the benefits of an EEA solution, even if the net transfer to the EU in the event of accession must be taken into account in this comparison; · the loss of monetary policy independence means that monetary policy can no longer build on a different economic development; other mechanisms of adaptation, such as flexible prices and wages, would also be needed; · the adaptation requirements – adjustment to the real interest rates prevailing in Europe or agricultural measures – must not be underestimated; In the welfare sector, the Federal Council would make a further study of the following internal measures in event of accession: · Action already existing in the draft stage to prevent social and wage dumping. · In the area of agricultural policy, measures must also be verified to compensate the inevitable structural adaptations · The conversion of the Swiss tax system, including social insurance, would be a matter for consideration by the political system in Switzerland in the next few years. To support the enlargement of the European Union, which is also in Switzerland's interest, the Federal Council has decided to make a contribution to the economic and social cohesion of the enlarged EU. The Swiss contribution amounts to CHF 1 billion over a period of five years.

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5.4 Networking Euro-med: flows in the European region The study of the flows between the ESPON space and its neighbours potentially provides another answer to the integration issue. Here we draw on the picture for migrations and their related remittances, then for trade and finally for financial flows. The conclusion that North-South regionalisation is much deeper than one usually thinks, except for firms and particularly in relation to the lack of North-South FDI, is by far the major shortcoming for the region. 5.4.1 People Tourism flows to or from one of the countries of the European region show an incredible level of integration. For instance, almost 90 out of 100 tourists who go to visit Egypt (map 56) come from the European region: 52 from the ESPON space, 4 from Central and East European Countries (CEEC), 9 from the CIS, 13 from the MEDA countries and Turkey, and 10 from the Middle East. The numbers for Northern America (3) or Asia (4) are very low indeed, and decreasing. Flows of German tourists tell the same story, the bulk of whom visit a country belonging to the region.

Map 56: Egypt tourism annual average (2001-2003)

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When it comes to migrations, and despite the geographical diversification of the flows, the ESPON neighbourhood has up to now been a major point of origin (roughly 45%) of the migration flows coming to the European Union. The traditional relations between the two shores of the Mediterranean Sea were even reinforced in the 1980s when Italy and Spain became major destination countries. The importance of ‘neighbour’ countries is also high in the stock of foreign population: 20 million foreigners lived in the EU25 countries before its enlargement in 2004; of this total only 5 million came from other EU countries, and 6 million from the Southern and Eastern Mediterranean countries.45 Besides, there is no doubt that a majority of the migrants who leave Eastern neighbours are residing in the EU25 territory. Russia traditionally attracts the majority of migrants who leave CIS countries but even this is changing: in 2003 Germany attracted 40% of the outflow leaving the Federation. A few ESPON countries are not as concerned by migrations coming from the neighbourhood as we have defined it, namely the United Kingdom, Luxembourg, and Portugal. In all other countries however such migratory inflows represent a significant proportion of the foreign residents. For instance former Yugoslavian and Turkish migrants represent 70 % of the foreign population residing in Austria. Countries such as France, Belgium and the Netherlands are strongly related to the Southern Mediterranean countries. In Spain, Switzerland and Italy the foreign residents mainly come from Mediterranean countries and from South Eastern Europe (Balkans). In Hungary and the Czech Republic, the majority come from the former USSR, former Yugoslavia, Romania and Bulgaria. As a whole, migrations draw a clear picture of growing regional integration. This increased regional integration is however jeopardized by two important features. The first relates to skilled migrants: the main result of the Carim study is that skilled migrants are increasingly being attracted to North America. The second relates to other regional processes. In particular, North America hosts many more Latin Americans than the ESPON space hosts migrants coming from its Eastern and Southern ‘neighbourhoods’. 15% of the US population are foreigners (of which 4% are undocumented); the sole share of Mexican is almost 10%. By comparison, at most 7% of the EU15’s population are foreigners (of which less than 1% are undocumented), the share from South Mediterranean is less than 4%.

45 The Euro-med Consortium for Applied Research on International Migrations estimates that 10 to 15 million international migrants (first generation) come from the Southern and Eastern Mediterranean countries, of which 5 to 6.4 million live in the EU 15. See Fargues Ph., ed, 2005, “Mediterranean Migration, 2005 Report”, Carim, European Commission.

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Remittance flows provide another view of the intense demographic and economic integration ongoing within the region. The region has 13 of the first 15 issuing countries (mostly European plus Saudi Arabia and Kuwait), and several of the largest beneficiaries of these flows in the World: Jordan, Morocco, Egypt, then Tunisia, and the Lebanon46. Georges Corm (200547) demonstrates that during the 1990s the MEDA countries received much more money from remittances than from all the other kinds of financial flows accumulated (aid, loans & repayment, FDI). In other words, the region is integrated by means of a North-South dependency. Only Turkey shows a virtuous path. The share of remittances in its GDP total has been declining since the end of the 1990s, thanks to the level of overall economic development (growth of GDP), to the rise in FDI and to the creation of a true productive system, generating profits rather than rent incomes. 5.4.2 Trade and financial flows During the last fifteen years the potential for economic integration across the region have increased considerably. In particular, the end of communism and the demise of the former Soviet Union, recovery after the end of the Yugoslavian war, the continuing Barcelona Process and Association Agreements, and the generalisation of economic strategies across the region based on international exchanges rather than on autarchy (even in Syria), have all contributed to this. The question remains however whether the EU is becoming more involved, commercially, with its closest neighbours, or whether it is becoming increasingly bound into ‘globalised’ trading relationships with remote industrial and emerging countries? As such then, can we really expect the consolidation of a Euro-Mediterranean Region from Morocco to Russia polarised by Western Europe? Or will a commercial geography emerge led by remote networks connecting the poles of the Triad? The answer is both. Almost a half of the consolidated EU15’s external trade is made with “neighbours” that include Central and Eastern European Countries (CEEC). Those countries and the EU are increasingly linked as they represented 3% of its trade in the 1980s, and more than 11% today. Should we add Switzerland, Norway and Russia (commercial partnership between the EU and Russia has risen during the last decade), what could be termed a process of European continental integration is clearly on the way. Southern neighbours do not show such integration. Taken altogether (the MEDA countries, the Middle East and the Arab peninsula, Turkey and Israel), they represent 12% of the

46 World Bank, 2005, “Technical Meeting on Measuring Migrant Remittances”. 47 Corm, G., 2005, « Coopération et mobilisation des ressources financières pour le développement durable en Méditerranée », Plan Bleu.

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EU15’s trade today, which is not insignificant, but their relative weight was twice as large 25 years ago. Figure 18 shows that Europe is increasingly connected to the major poles of the Triad, and less and less to the developing countries – even with those that belong to its close Mediterranean neighbourhood. Moreover, the position of the US in terms of Mediterranean trade is low, but growing.

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Figure 18: EU15’s goods trade 1980-2003 (imports + exports, in Euros)

Economic flows between Europe and its neighbourhood show one major shortcoming however, for firms Europe still ends at the shore of the Mediterranean. At the beginning of the 21st century European FDI stocks per inhabitant in the MEDA countries were eight times smaller than in Central and Eastern Europe (figure 19). This illustrates rather well that there is as yet no North-South regional productive system. Generally speaking, over the last 15 years the region has experienced only weak progression in terms of economic flows through the Mediterranean. Regional integration is however ongoing eastward, for instance through the rapid delocalisation of the western automotive industry. The divide however still exists southward. The MEDA countries are highly dependent upon western European markets and investors (figure 20), though they are not significant partners for European exports and investments as is demonstrated by the case study on the internationalisation of Italian enterprises (Box 9) Nevertheless, the last two years (2004-2005) show the growing attraction of Egypt, Turkey and Morocco, while annual FDI to the MEDA countries has jumped

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from 10 to 40 billions Euros48. The main increase however comes from the Gulf States and not from ESPON countries, and as such, on its own, this rise is not sufficient to change the general statement about the low attractiveness of the Mediterranean. Many criteria (e.g. the role of EU markets for the Mediterranean economies, migrations of workers, students or tourists, cultural links through TV programmes, and common environmental threats) show the strong integration of the two shores of the Mediterranean, though, ultimately, the key figure concerning FDI hampers this positive view.

Figure 19: 2000-04 evolution (%, value) of EU 25 goods trade with various neighbours

48 Saint Laurent B., Saint Martin C., Jaffrin S., 2006, « Les IDE dans la région MEDA en 2005 », Notes & Documents n°20, AFII, Anim

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Figure 20: ESPON countries are the main pole for the neighbours’ economy: The case of Tunisian inflows of FDI, breakdown by

geographical origin

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Box9 : The geography of Italian internationalisation: relations with Central Eastern European and South and Eastern Mediterranean countries

The current economic scenario is becoming increasingly globalized, and every enterprise, regardless of its dimension, has to face international competition. Assuming a rather oversimplified theoretical framework, there are basically two ways in which a firm can deal with internationalization: exporting goods or services, or becoming international. The analysis refers to Italian flows directed towards Central and Eastern European countries and the Southern and Eastern Mediterranean rim. Internationalization towards Central and Eastern Europe. Central and Eastern Europe represents an important destination for Italian investors: it attracted 2,725 firms in 2004. Investments towards this area are impressive considering that, before the 1990s, they were almost completely absent, as in 1986 they represented only 0.6% of Italian investments. By 2004 they had surpassed 27%. Concerning destinations, Romania, Russia and Poland are by far the most relevant markets, followed by Hungary, the Czech Republic and Bulgaria. However, it has to be noted that such investments are strongly polarized by a few metropolitan areas, basically the capital regions. At the same time, trade between Italy and the Central-Eastern European countries has grown in recent years. This is probably due to the delocalisation of Italian industries in the region. Internationalization towards the Southern and Eastern Mediterranean countries. In 2003, the weight of Italian investments directed towards this area was a mere 1.9%. Moreover, Italian investments are polarized by a few countries, with Turkey and the Lebanon receiving 63% of Italian investments, while the figure surpasses 70% when Tunisia is included. The situation is rather different in the case of commercial flows. The Southern and Eastern Mediterranean countries represent important destinations for Italian commerce. First of all, it has to be noted that the Mediterranean area in general represents, for Italy, the pivot of trade flows, absorbing in 2003 more than 30% of exports and providing 25% of imports. Currently, the most important Italian partners are Tunisia and the Lebanon – absorbing more than half of the commercial flows directed towards Mediterranean Africa – while, in the East, Turkey and Israel are important. Concerning imports, the most important areas are the Lebanon and Algeria, their oil and methane providing 80% of the value of the imports from the South Mediterranean countries. Conclusions There is however a differentiation in the patterns of Italian internationalization in the considered areas. The Central and Eastern European countries confirm their nature as transition economies. They show a strong ability to attract investments. Even if the investments are concentrated on a few sectors, the investment profile varies more than in the Southern and Eastern Mediterranean case. The economic relations between Italy and this rim assume the classical form of those between developed and developing areas, concerning the mere acquisition of inputs and the delocalization of low value added and low technology industries. The Central and Eastern Europe countries are becoming increasingly active in terms of globalization. On the other hand, the Southern and Eastern Mediterranean countries’ role is more passive and functionally dependent. The construction of a free trade area between the European Union and Southern and Eastern Mediterranean Countries is now being discussed. The enlarging of the local market will support an expansion of the investments directed toward this area. Considering the progressive integration of the European Union and Central and Eastern European the future for the Southern and Eastern Mediterranean Countries presents both opportunities and risks.

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5.4.3. Public funds Launched by the Commission in 2003, the European Neighbourhood Policy (ENP) unifies various previous policies and budgets: MEDA, Phare, Tacis etc. The new European and Neighbourhood Partnership Instrument concerns

- nine Mediterranean countries: those of the former Barcelona process, minus Turkey (that will benefit from a specific budget), Cyprus and Malta, plus Libya

- the three Caucasian countries - the three eastern countries that are located between the EU and Russia

(Moldova, the Ukraine, Belarus - though the latter is still not included for well known political reasons).

The Balkan countries are not included because they have been given an ‘entry perspective’ and are such potential candidates. Nor is Russia party to the ENP, though it has a specific strategic agreement with the EU the general goals of which are nevertheless quite similar to the ENP’s: create a common space for trade, finance, migrations, training, culture and security.49 The assets of the ENP initially appear quite strong. For the first time, the EU has a comprehensive view of its regional range. This view is however hampered somewhat by events to both the east and to the south. In the East, the Ukrainian call for membership during the December 2004 presidential elections raises a tough political issue with Russia. In the South, the recent Barcelona Summit in November 2005 (for the tenth anniversary of the first Agreements), which was supposed to enhance the Mediterranean partnership through this ambitious ENP, was a complete failure. While all EU states where represented by the heads of government, only two Mediterranean partners sent theirs. The reasons for this failure relate to the inherent limits of the Barcelona process. This is perhaps best reflected in the statistic that during the past decade, European’s subsidies reached 27€ per inhabitant in the CEE countries but less than 2€ in the MEDA countries. Figures 21 and 22 show, the rising share of the CEE countries in the geographical breakdown of EU’s public aid. As such, the fear among the EU’s southern neighbours that the Mediterranean would not be a strategic priority is understandable. European geographical priorities are often described as pyramidal with the Balkan and CIS at the pinnacle followed by Africa (with the exception of the Maghreb); then Latin America; and only then the MENA region – where US subsidies are also important, particularly in Jordan and Egypt – with Central & South Asia being least important. Indeed, as the EU concentrated on the East throughout the 1990s, the partnership with the South – particularly in 49 The 1999 EU-Partnership Agreement is about to run out, negotiations to renew it are ongoing but have proved to be difficult to conclude. Few details have emerged as to the key points at issue.

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relation to the problems that have arisen in the context of the Barcelona process – stalled. Rising tensions in the Middle East, specifically relating to the War in Iraq and the conflict in the Lebanon have moreover masked the emergence of a new partnership between the USA and the Arab World (Broader Middle East initiative, free trade zones with Jordan and Morocco, etc). One final strategic feature has also to be taken into account. Compared to the official aid disbursed by the EU states (many of which maintain their relationships with their former colonial remote areas), that of the European Commission is much more focused on the CEE countries, Turkey, the Palestinian Territories and, generally speaking, on the ‘neighbourhood’ as we have defined it. In absolute terms, EU members give larger subsidies than the Commission to the neighbourhood. However, the Commission follows a clear political line in making specifically targeted efforts towards the neighbourhood. Map 57: shows that the European (Commission + member states) share in terms of total assistance given to the CEE countries is high, (they are now of course full members), as they are to the Balkans and to the Maghreb countries. They are however significantly lower in the Near and Middle East, where the USA’s share is higher. Furthermore, since the 1990s, the EU’s share has stabilized in the Western Balkans where reconstruction is largely supported by the EU, though it has declined in North Africa, in the Near and Middle East and in the CIS countries. Obviously, regionalisation is still not considered as a strategic priority by all European member states.

Map 57: Net official development assistance to the neighbourhood and the EU share (members and Commission) from 2001 to 2004 (annual

average)

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Figure 21: European aid subsidies, by region, 1991-2003

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Figure 22: OECD Countries’ public aid in 2003 and 2004: Breakdown by donors and beneficiaries

5.4.4 Air flows The analysis of air flows between ESPON 29 and the neighbouring countries is particularly interesting as it reveals how these countries are generally more connected to the core of north-western Europe than to their immediate neighbours with which they share common borders. In order to clarify this “tunnel effect”, we have decided to analyse more precisely the flows between Western Europe (EU15 + Switzerland & Norway) and the rest of the Euro-Mediterranean area defined in the usual manner. The most important structural relations in terms of air connections are measured in flows of passengers weighted by distance in order to eliminate short distance flows which do not contribute to the global organisation of the Euro-Mediterranean region The first obvious result of the analysis is the fact that the major regional West European gateways are fully concentrated along the “blue banana” from Manchester to Milan and with the domination of Paris and London clearly visible. The European towns located in the northern and southern peripheries clearly play a smaller role in the connections of the neighbourhood, even if some cities are able to build specific links (Madrid, Barcelona, Athens, Stockholm, and Helsinki). Looking at the neighbourhood, the pattern appears more polycentric and many cities have important connections with Western Europe, in particular in an eastern and south-eastern direction with the major nodes of Moscow, Tel Aviv, Dubai, Cairo and Istanbul which act as stepping stones on the route to Asia. Medium nodes of connection with Western Europe take place both in east central Europe (Warsaw, Prague, Budapest, and Bucharest) and in North Africa (Dakar,

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Agadir, Casablanca, Tunis, Monastir, Djerba, and Charm-el-Cheik). Some states were however clearly very poorly connected by air to Europe in 2000, generally for political reasons, as is the case with Algeria, Libya, the Ukraine or Belarus though, by 2006, the situation is likely to be rather different. We have also tried to examine whether airports located in the neighbourhood are specifically connected to some states or airports in Western Europe or whether the distribution pattern is consistent across all of the core areas of north-western Europe (map 58).

Map 58: Major air connections between Western Europe and its neighbourhood

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The analysis reveals clear specialisation in the distribution of connections between Europe and its neighbourhood. The Persian Gulf (type 1) is clearly oriented towards the UK and London’s airports while the Maghreb (type 2 and 3) is logically connected to France and Paris. Airports from central Europe (Germany, Austria, and Switzerland) see specific connections with Turkey and the Balkans as well as the specific destination of Tunisia (type 5 and 6). Multiple connection-type situations (type 4) characteristic of Tel Aviv, Cairo, Moscow, and the capitals of the new member states (Prague, Budapest, Warsaw, and Bucharest) also exist, where these cities are equally related to all major nodes of the “Blue Banana”. The analysis of connections between Western Europe and its Euro-Mediterranean neighbourhood could however give the false impression that the entire neighbouring region is strongly polarised by the major airports of the Pentagon. This is not however the case, as can be clearly demonstrated by the analysis of major flows linking the cities of the neighbourhood of Western Europe. Looking at map 59, it appears that the Middle-East and the Persian Gulf forms an area of strong inter-relations organised by a polycentric cluster of major airports: Jeddah, Istanbul, Tel-Aviv, Cairo, Dubai, Riyadh, Ad Damman and Teheran. This part of the European neighbourhood defines, in reality, a relatively independent network which can compete with Western Europe in terms of attraction and one which has several comparative advantages. It is obvious that the attraction of the major airports of Saudi Arabia mainly relates to the religious factor with pilgrims from all of the Muslim countries travelling to Mecca on the “Hajj” which is one of the five pillars of Islam. The religious factor is not the only explanation of this convergence of flows which is also clearly related to the economic prosperity of the oil monarchies from the Persian Gulf and their need for labour force imported from all of their neighbouring countries, in particular Egypt and Jordan. The situation of Istanbul is particularly interesting as this airport appears to act as a bridge between the Middle-East network of strong air connections and another network centred on east-central Europe. Istanbul is also able to develop strong connections with Central Asia (Tashkent) and with the Maghreb (Tunis). If and when Turkey joins the European Union, Istanbul would, without doubt, be a major gateway for the European territory, fulfilling the same role as Madrid does vis-à-vis Latin America.

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Another interesting situation is that of Ljubljana which remains strongly connected with most airports across the former Yugoslavia and can be considered as a specific gateway for the Western Balkans.

Map 59: Internal connections in the neighbourhood of Western Europe

The data used for the creation of this map was unfortunately relatively old (2000) and probably not complete as it can be deduced from the lack of connections between Budapest and the rest of neighbourhood or by the fact that connections between Moscow and the airports of Russia are not registered. There is no doubt however that the ESPON 29 members should regularly monitor all air

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connections at this level to regularly check on a situation which is evolving quickly. 5.5 Conclusion: The whole, better than the sum of the parts: in varietate concordia50 In this conclusion, we begin by presenting some of the prospective results concerning the future situation of the ESPON 29 in 2030 or 2050. This result has been elaborated in common with the ESPON projects 3.4.1 Europe in the World and 3.2 Scenarios. We then discuss some of the policy orientations related to the Neighbourhood Policy and the Lisbon Strategy. 5.5.1 Redistribution of population in Euro-Mediterranean (1950-2050) The distribution of population by states in the Euro-Mediterranean area (WUTS11 & WUTS12) has completely changed over the last 50 years and this process will continue during the next 50 years. The population of the ESPON 29 countries is declining as compared to that of the neighbouring states (Table 19). Using the actual political division for a better comparison, we can see that 10 of the 15 most populated states of Euro-the Mediterranean area were ESPON countries in 1950, but this had fallen to only 6 in 2000 and will likely fall to 5 by 2050. At this time, Germany with 79 million inhabitants will be only in 5th position after Egypt, Iran and Turkey which will all have reached a population size greater than 100 million. Russia will only be in 2nd position as its population would have decreased from 147 to 112 million between 2000 and 2050. The expected variation in population over the period 2000-2030 (map 60) indicates the existence of a strong regional variation with decreasing populations in East and Central Europe, stability or moderate growth in Northern and Western Europe, medium growth in North Africa, Turkey and Central Asia, and a very important growth in Sub-Saharan Africa and the Arabian peninsula. This diversity in the demographic situation is sometimes considered to be a threat by some segments of public opinion and by policy-makers in the European Union countries who talk of a so-called “European demographic decline”, or more prosaically, of the “danger of invasion by southern migrants”. We can neatly reverse this common proposal when we analyse the situation at the World scale. The existence of a growing demographic area in the immediate neighbourhood of the ESPON 29 countries is at the same time an economic opportunity and a political challenge.

50 The European motto "Unity in diversity" (In varietate concordia) was officially proclaimed on 4th May 2000 in the European Parliament.

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Table 19: The evolution of population by state in the Euro-Mediterranean area (1950-2050)

1950 2000 2050*

Rank Name Pop. Name Pop. Name Pop.

1 Russian Fe. 103 Russian F. 147 Egypt 126

2 Germany 68 Germany 82 Russian F. 112

3 U.K. 50 Turkey 68 Iran 102

4 Italy 47 Egypt 67 Turkey 101

5 France 43 Iran 66 Germany 79

6 Ukraine 37 France 61 U.K. 67

7 Spain 28 U.K. 59 France 65

8 Poland 25 Italy 58 Iraq 64

9 Egypt 22 Ukraine 49 Yemen 59

10 Turkey 21 Spain 41 Italy 51

11 Romania 16 Poland 39 Niger 50

12 Netherlands 10 Algeria 30 Algeria 50

13 Hungary 9 Morocco 29 Saudi Arabia 49

14 Morocco 9 Iraq 25 Morocco 46

15 Czech Rep. 9 Uzbekistan 25 Spain 43

Source: UNPP, 2004 – Estimation for 2050 based on medium variant

Map 60: Population in Europe and its Neighbourhood in 2030

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5.5.2 Ageing and sustainable demographic development

The demographic question cannot be reduced to the quantitative problem of the size of the ESPON 29 population and that of its neighbours. It is more generally related to the qualitative problem of the evolution of the age structure of the population and the related problems of the dependency ratio (see ESPON Project 1.1.4) which has strong economic and political consequences. The index of sustainable demographic development (ISDD) which has been proposed in the ESPON project 3.2 Scenarios for the analysis of trends of territorial cohesion inside ESPON 29 can be transposed at the Euro-Mediterranean scale in order to evaluate the possible complementarities in the context of the development of North-South regionalism. When the demographic evolution of ESPON 29 is compared to that of its major competitors in the World (Figure 23) the situations appears much better than that of Japan, where the ageing process is very strong and is not balanced by an equivalent increase of life expectancy. We can also forecast that the situation will soon be better than that of China where a very important ageing process has been developing since 1975 and where the progress in life expectancy remains limited to a limited segment of the population. The situation is however clearly less favourable than that of the United States where important immigration flows ensure a strict parallel increase of ageing and life expectancy which is not the case for the ESPON 29 countries. If we consider that an important difference between life expectancy and median age is a condition of demographic sustainability (see ESPON 3.2, TIR), the evolution of the Euro-Mediterranean in the near future reveals four very different patterns of evolution (figure 24) with (1) important progress in sub-Saharan Africa, (2) stability at a high level in northern Africa and the Middle-East, (3) high level but progressive degradation of the situation in Western Europe, (4) low level without progress in Eastern Europe. But what is perhaps most important is the fact that, when considered as a whole, the Euro-Mediterranean area presents a perfect stability of demographic sustainability at a high level (40 years of difference between life expectancy and median age) which is exactly comparable to the trajectory of the USA over the same period. In systemic terms, we can say that each part of the Euro-Mediterranean Region would face strong demographic problems in isolation - too many young active people on the southern shore, and; too many old people on the northern shore The “whole is better than the sum of the parts” and considered together the area as a whole displays a nice pattern of demographic equilibrium and sustainability.

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Figure 23: A Comparison of the sustainable demographic development of ESPON, the USA, Japan and China (1980-2030)

Figure 24: Sustainable demographic development in the Euro-Mediterranean (1955-2045)

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5.5.3 Human development as a diffusion process with barriers effects? The comparison of the distributions of the Human Development Index (HDI) in 1975 and 2002 strongly suggest the existence of a diffusion process of prosperity and development around the core of north-western Europe. But this diffusion process appears to be irregular in space and time and seems to be directly related to the degree of the opening or closure of borders. A regression model applied to the evolution of HDI between 1975 and 2002 helps to clarify this assumption and reveals which countries have experienced the most important progress of their level of human development during the period 1975-2002 and which have experienced a slower increase or stagnation (map 61). The countries of North Africa and the Middle-East represent the most positive evolution with an increase of HDI which is greater than the general trend observed across the Euro-Mediterranean area. This positive situation highlights those states with open economies that have developed strong economic relations with the European Union either through trade or migration. On the other hand, the countries of Eastern Europe experienced a negative evolution which can be related to the demise of the socialist system and the existence of a strong barrier with Western Europe until 1989. The situation is less negative in East Central Europe which had maintained contact with European Union before 1989 (Hungary, Poland) and which, quickly benefited from aid flows after the fall of the iron curtain and in the context of EU enlargement. Another negative evolution of HDI can be observed in countries located to the south of the Sahara which were not involved in the globalisation process and which have sent, until quite recently, relatively few migrants to the European Union.

The clear message delivered by such historical analysis of HDI is the fact that the best way for the European Union to ensure the development of its neighbours is through the encouragement of some level of legitimate migration (South-North) combined with significant investments (North-South). If the assumptions of the diffusion process are correct, the analysis also suggests that, in the near future, the development process will depend on new partnerships between East and Central Europe on the one hand, and the Northern African and sub-Saharan countries on the other. The European Union should take the initiative in encouraging such movements in both directions.

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Map 61: Diffusion of human development in the Euro- Mediterranean countries between 1975 and 2002

(a) Situation in 1975 (b) Situation in 2002

(c) Relative performance 1975-2002

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5.5.4 The past and future evolution of the political weight of the European Union in the World

As we demonstrated in the FIR the evolution of the population or the GDP level of the European Union between 1950 and 2004 provides a fascinating example of what may have been an implicit political strategy. This strategy – if that is what it was – was designed to maintain Europe’s place in the world, as for the period as a whole we can observed a distinct structural trend of demographic and economic decline (Figures 25 & 26) which is only balanced by means of a reliance on the political dynamic of enlargement to ‘balance the books’. ♦ The population of EU6 in 1950 was more or less equal to 6% of the World

total but would have declined to 3% in 2000 without enlargement. On the contrary, the share of World population located in the European Union has remained very stable around 6% when the EU enlarged to 9, 10, 12 and 15 members. With enlargement to 25 members in 2004, the share of World population located in the EU reached a historical high of 7% and could jump to 8% with the accession of Romania, Bulgaria and Turkey between 2007 and 2015. In other words, demographic decline need not be fatal for the European Union from a political point of view.

♦ The GDP (pps) of EU6 in 1950 was more or less equal to 15% but would

have declined to 10% in 2010 without further enlargement. The membership of the United Kingdom in 1973 produced a decisive increase in this share which reached 20% and remained very stable around this level when Europe enlarged to 10, 12, 15 and 25 members. The trend towards the economic decline of the area remains important and it is only with further enlargement to countries like Turkey, perhaps in the period after 2015, that the European Union could eventually maintain this 20% share in future.

What is important to underline here however is the fact that the controversy over further political enlargement is a false one when considered form a strategic perspective. There may indeed be many political solutions to creating and maintaining strong linkages between the European Union and its neighbouring countries, and while political enlargement is not the only solution, what is not questionable is the fact that the European Union will be obliged to develop the mechanisms to manage these linkages and as such must choose a positive policy of socio-economic engagement over a negative one based solely on securitisation.

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Figure 25: Evolution of the share of World population of the European Union (1950-2020)

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5.5.5 Policy orientations 5.5.5.1 North-South Regionalism The results presented here show that the only way in which Europe can compete with the other large economic regions of the World is to further in its own regional integration process, not only through the traditional approach to political integration but also at a North-South regional scale – functional integration 51. In this respect then it is irrelevant to restrict the neighbourhood issue to a concern over free-trade or immigration control. The countries neighbouring the ESPON area to its East and South should instead be functionally integrated in a global regional programme including labour force and training issues, investment issues, energy issues, and environmental issues. To complete this integrated space the EU will need a strong and sustainable, mutually beneficial, strategy towards both its Eastern and Southern neighbours. First, it is necessary to maintain and develop a regional and sub-regional territorial base for the implementation of the neighbourhood policy, while currently its Action Plans are designed from a purely bilateral perspective (Commission / each neighbour country). As far as the energy issue, the environmental issue or the migration and training issues are concerned, the regional scale is surely the correct one. Second, the ENP Action Plans should enhance the local dimension of projects, with a strong commitment from local public and private actors. The EU could more easily monitor the implementation of such projects, and make regular evaluations, using a similar system to that used in the context of European regional policy. The promotion of territorial local projects is one way in which to encourage decentralisation in neighbouring countries, which happens to be poorly developed in both Russia and across the Mediterranean region more generally. Although, realistically, expectations of immediate changes on the political organisation of these countries regional and or sub-regional structures is not realistic. Nevertheless, the initiation of such a reform process could, ultimately, improve the efficiency of cross border cooperation programmes even in the short to medium term. Many currently do succeed because local authorities remain too dependent on the central authorities. In addition, the funding of cross border (Interreg III A) and transnational cooperation (Interreg III B) projects through different budgets (INTERREG, TACIS and MEDA), hampers their implementation, with the Commission even referring to this as an ‘inherent design fault’. As such, future cross-border cooperation should be

51 See for instance IFRI, 2003, Le commerce mondial au 21ème siècle, Paris.

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backed up by one common budget for territories located on both sides of the EU external border. The new regional arrangements, and in particular, the future European and Neighbourhood Partnership Instrument, must have a significant amount of funds dedicated to cross border cooperation. Furthermore, questions have arisen as to whether the ENPI will be efficiently handled by the DG Relex. This DG has no experience in the field of local development or in cross border cooperation. The European Commission should define more clearly the future connections between the DG Regio and the DG Relex for the efficient implementation of ENPI funds.52 5.5.5.2 Lisbon Strategy In accordance with the results obtained in this project, “Europe in the World”, we can assert that one of the main challenges for the European Union over the next 20 years will be the decisions to integrate or to ignore the neighbourhood in general and the Southern Bank of Mediterranean Sea in particular in its wider economic and political strategy. Many consequences for the future of Europe in both a territorial and a societal sense depend on this crucial choice which defines an alternative between two very different futures.

(a) The European Bunker This first policy option fits with the actual baseline scenario of the European Union (see ESPON 3.2). The Euro-med strategy launched in Barcelona in 1995 has been definitively closed by the disaster of the ministerial conference of December 2005 where, with the absence of most of the Southern leaders, the only important questions discussed were those between the Northern Mediterranean countries such as how to limit migratory flows induced by the growing economic and demographic gradient on both side of Mediterranean Sea. Moreover, security issues and the fear of terrorism have come to preoccupy the cooperation partnership process which was initially based on a much wider vision of join economic, social, ecological and cultural development on both sides of the Mediterranean. In the short term, and out of any moral consideration, this “bunker strategy” appears pragmatic and realistic for an economically declining and demographically ageing Europe. In reality, this construction of an island of prosperity surrounded by oceans of poverty would almost certainly have tragic consequences.

52 At the current time of writing, October 2006, the Commission had still not concluded its internal consultation process on how exactly the ENPI would be run. INTERACT meetings had taken place in Helsinki and Rome in February, and in Brussels in April, with a final meeting scheduled for ‘October/November’ 2006, with the adoption of the regulation scheduled to take place at this time.

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(1) Migrations have never been stopped by borders when wealth differentials are greater than 1 to 5 or 1 to 10. In such a scenario, the European Union will be obliged to invest more and more in the military control of its southern border and will be therefore be obliged to limit EU budget allocations to other objectives like social cohesion, sustainable development or R& D. (2) The developing states of the southern bank of the Mediterranean will probably never agree to the proposal of being simple “gatekeepers” for the European Union against the poorest societies of Sub-Saharan Africa. They will therefore develop economic and political partnerships with other parts of the World like United States (its Great Middle East project) or China, instead of being allied to Europe and will develop as a direct competitor in its immediate neighbourhood. (3) The integration of immigrants from the southern shore of the Mediterranean will be profoundly affected by the limitation on travel and family reunification, multiplying the problems Europe’s inner cities and suburban ‘ghettos’. Conversely, tourism flows and the retirement of European people to southern countries will be dramatically affected by the degradation of political relations, producing increasing economic and ecological pressure on the coastal areas of the northern shore of the Mediterranean. (4) Last but not least, the psychological climate of the European Union will be deeply affected by the climate of fear and guilt produced by Europe’s isolation from the poorest people of Africa. The universal dimension of the European project will be seen as hypocrisy. Moreover, this global degradation of the international image of Europe could have significant negative consequences from an economic and political point of view.

(b) A Marshall Plan for Southern Countries An alternative to the ‘bunker’ of traditional fortress Europe conceptions is a political option which seems at first glance to be based on pure utopia but on deeper consideration is in fact probably the only realistic path to achieving the goals of the Lisbon Strategy. The crucial point, presented in Figures 25 & 26, is that the European Union will not be able to remain a major actor in the new globalised economy if the EU is not able to maintain its economic and demographic size at World scale. Over the last 40 years, the European Union has consistently represented, more or less, 6% of the World population and 20% of World GDP, thus ensuring that it ahs a decisive capacity to influence developments despite its low military capacity as compared to United States or to the former Soviet Union during the cold war. But this “6/20” level of power has only been maintained by successive enlargements of the EU from 6 to 9, 12 15 and 25. (see. C.4.4.) without this successive political enlargement, the

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influence of Europe would have been halved demographically and economically, and its capacity to influence would have been dramatically reduced in political, economic and cultural terms. Moreover, the ability to maintain a separate “social model” or to propose an “ecological dimension“, (e.g. the Kyoto protocol) despite the international tendency towards deregulation, would have been impossible without the power that is provided by the economic size of the EU at World scale. The difficult debates around the candidature of Turkey and the problems of political integration revealed by the European Constitution Treaty referenda failures in France and The Netherlands in 2005 proves that political enlargement is probably not the easiest solution to maintaining Europe’s capacity to influence the World, at least in the short term. There are other paths worthy of exploration and perhaps one of the most promising would be the development of a kind of Marshall Plan directed toward the European neighbourhood and especially to the Southern Mediterranean countries. What would be the advantages of such a policy option? (1) The Southern Mediterranean countries are actually in the most favourable demographic situation for economic development, with a good proportion of young adults with relatively high life expectancy and a stable fertility rate. This moment in history where a state has its maximum proportion of active population provides a unique opportunity both for these countries and for the EU. (2) The development of higher education in the Southern Mediterranean countries is of common interest for the countries concerned and the EU. Increasing the flow of educated workers into the ESPON space would help Europe to balance its negative brain-drain with North America while at the same time helping to nurture the growth and development of technical and scientific elites in the Southern Mediterranean countries. Such positive outcomes could be expected by enlargement of the territorial scope of the Erasmus or 7th Framework Programmes with a related increase in funding. (3) European economic investments in the Southern Mediterranean countries will not necessary stop immigration to Europe though such policies will better ensure some kind of equilibrium in the flows across the Mediterranean where, for instance, tourism and the migration of old European people of pensionable age are included to balance the South-North flow of young workers. (4) As a hedge against the collapse of globalisation (due perhaps to increasing energy prices or a financial crisis), the development of integrated relations with the immediate neighbourhood of Europe will contribute to limiting the effects of such external turmoil on the European economy. Conversely, Europe will be better able to balance the influence of new economic powers like China if it can rely on a wider integrated area of common prosperity. (5) Last but not least, the psychological effect of the opening of a new frontier linking the development of Europe and the development of its neighbouring countries could produce a mental revolution in Europe and help to develop a

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more optimistic view of the future with important economic, political and social consequences.

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6. Part D Internal differentiation of European territory regarding its the relations with the rest of the world

6.1: Introduction The aim of this final part of the report is to provide a general overview of the relationship between the regions and cities of Europe and the rest of the world. This is one of the key questions of the whole study, because it is an attempt to evaluate the consequences of the relationship Europe has with the rest of the world within the ESPON space. This is not an easy challenge however because, on the regional level, direct indicators are either scarce or missing completely. For example, trade is mainly measured at the national scale while airflows are measured at the city level. Since we have no direct and comparable indicator on this theme, we will work with indirect indicators. Two main hypothesises will guide our approach:

- Hypothesis 1: the level of the internationalization of territories is a priori an advantage in terms of global economic competition.

- Hypothesis 2: Weaknesses and strengths vis-à-vis global economic competition are dependant on the economic structure at the regional level. This general hypothesis implies at least four sub hypothesises: H2a: a high share of light industry is a weakness because these low technological industries are submitted to higher international competition H2b: a high share of financial services is an advantage as it is a good indicator of the level of economic command and, consequently, economic independence H2c: a high technological level is a strength in the global competition since it gives the region the ability to produce innovations, which are a source of economic growth H2d: a high share of market and non market personal services (education retail trade etc) is an indicator of an economy more indifferent or at least less endangered by globalization.

The first hypothesis is based on the fact that the regions which are most integrated into the world economy already have the assets needed to effectively face up to international competition, especially if they have a leading role in the world economy. This point is related to the concept of metropolisation, which supposes among other things that the largest most commanding towns are the most advantaged in the new globalized World (Veltz, 1996; Sassen S., 1998; Marissal P., Vandermotten C., 2004). Many of the empirical statements of ESPON have supported this hypothesis by showing that the largest towns and metropolitan regions had higher economic growth rates than their national or

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regional environments; even if their insertion into the world economy is not the main cause of the metropolisation process (see p. 68 of the 3.4.2. FIR) However, this assertion raises many questions and needs at least to be qualified. Firstly, the level of internationalization could also be a weakness if the economic structures are not adapted to global competition. Secondly, the ‘globalization effect’ should not to be overestimated since we have already insisted on the long term tendency of the “Europeanization of Europe” (p. 229-232 of the SIR). Such an observation could mean that most of the competition is intra-European (“regional”) and that the global competition concerns only a limited share of the economy. Consequently, while some regions may be concerned by the rise in global competition (metropolises, textile regions etc), many others will remain, relatively speaking, indifferent to global competition. The share of services to households, including non-market services, could thus be a useful indicator of this relative indifference to globalization (see hypothesis H2d). This leads us to conclude that the level of internationalization should not be used as a single indicator but should rather be combined with the other parameters defining the regional structure. 6.2 Internationalization of regions and nations in Europe The objective of this part of the report is to measure the level of internationalization at the regional level in Europe. The level of internationalization will be evaluated by a set of indicators such as trade flows (only at national level), airflows, migration flows, transnational headquarters, and the existence of stock exchanges. 6.2.1 Trade flows As we already noted, trade flows are only considered at the national scale as European-wide regional trade statistics do not exist. Some countries do publish regional trade statistics but this data is currently neither comparable nor exhaustive at the ESPON level. 6.2.1.1: The openness rate of ESPON countries The openness rate has been defined as the ratio between the sum of exports and imports with non ESPON countries divided by global GDP. This could be interpreted as an indicator of “how important the relationship with the rest of the World is for the different ESPON countries”. We already noted that this opening is relatively weak for Europe as a whole, though it is interesting to compare the

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geography of this relative openness to that of the rest of the World (map 62). In so doing, we can observe here the higher openness to the rest of the World of Ireland and the United Kingdom: this again confirms the very high degree of globalization of their economies. Some Eastern European countries such as the Baltic States or Bulgaria are also much more open to the rest of the world. This can be clearly explained by the persistence of traditional commercial relations with the Community of independent States (CIS), and in particular by a continuing energy relationship with Russia. On the other hand, the Mediterranean countries, Poland and a number of the smaller economies such as Denmark and Austria register as least open to the rest of the world, since most of their trade is Europe-oriented.

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Map 62: Openness rate of the trade of European countries with non ESPON countries, 1996-2000 (ex map 43)

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6.2.1.2 The geography of trade of the ESPON countries The intra or extra-ESPON trade pattern seems to be influenced by several factors (map 63). The geographical position of the country seems to play a role, since for instance Bulgaria, Cyprus or Malta have a relatively weak share of their trade with ESPON countries because of their peripheral position in Europe. Several Western European countries, such as Germany, the United Kingdom, Ireland or Italy, have a high share of their trade outside the ESPON area (comparative to the rest of ESPON countries) because of their traditional commercial relations with other world regions. Inversely, despite their very recent integration into the European Union, the Central European countries have a clearly ESPON-oriented trade pattern. Note should also be made of the basic ‘European orientation’ of the trade patterns of the small countries, even those that are not members of the EU25, such as Norway and Switzerland. More generally, this figure clearly raises the question of ‘globalization versus regionalization’, that is to say that the global growth in trade is partially due to regional integration and not necessarily to intercontinental trade (Siroën J.M., 2000). Figure 27 shows that the ‘globalization process’ in recent decades has been, in part, a statistical illusion. Indeed, the growing level of international trade is mainly intra-regional in nature, as indeed we can also observe from the growing share of intra-regional trade between the NAFTA or East Asian countries. For the EU 25 as a whole the share of trade carried out within the customs union has grown from 52% around 1960 to 66% around 1990, and has hovered around this level throughout the last 15 years. This has been the case for some of the less integrated countries in the EU 25 economy, such as the United Kingdom whose European trade share has grown during the same period from 32% to 58%. However, in the last decade there has been a clear decline of the relative share of Europe in UK trade, probably linked to the growing internationalization of the UK economy, and the specific role of the London metropolis. Greece, after growing integration with EU 25, also now shows a decline in its relative share of EU 25 trade, mainly because of the growing trade with its neighbouring countries. Growing intra-regional flows can also be demonstrated by the integration of the Central and Eastern European countries inside the ESPON area (see map 63), since we can observe that the rising orientation of their trade within Europe has clearly preceded their recent political integration inside the EU 25.

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Map 63: Share of ESPON-based trade in each ESPON country’s external trade in goods (1996-2000)

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Figure 27: Evolution of the EU 25 share of the trade of European countries, 1960-2000 (ex figure 49)

Map 64 is an attempt to synthesise the geographical orientation of trade of the ESPON countries (see methodological details in volume 2). This typology is based on the share of each of the 29 ESPON countries with the WUTS3 level, excluding ESPON trade. It provides information on the geographical orientation of the trade of each ESPON country with the rest of the world. The map also shows the share of extra-ESPON trade because the meaning of the geographical trade structure with extra-European countries is not the same for all countries, according to whether they have a European-oriented trade structure or not. Map 63 and Figure 27 illustrates the trade structure of each type.

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Type 1 (the United Kingdom, the Netherlands, Germany, Sweden, Switzerland, and Austria) is the most American-oriented one, if we exclude the very marginal type 3, which groups only Ireland, Norway and Luxemburg. Trade with East Asia is also specific to type 1. Type 4 includes Belgium and the South-West European countries. We find here a strong tendency for trade with Africa, the Middle-East and South America. Types 5 and 6 include most of the new member states, whose share of trade with Eastern European countries (non ESPON, which means mainly Russia) is very high, mainly for the type 6 (Bulgaria, Slovakia, Lithuania, and Latvia which are still linked to the ex-USSR, and Slovenia, still in trade relations with ex-Yugoslavia). The type 2 includes only Greece and Finland, whose share of trade with Eastern Europe is still above the 20% mark.

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Map 64: Classification of countries in respect of the geographical orientation of their extra-European trade, 1996-2000

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Figure 28: Geographical structure of the trade of the different types, by WUTS3, 1996-2000

6.2.1.3: The areas of influence of the major ESPON countries or groups of countries This approach reverses that of the previous one by indicating which ESPON country is most important for the different parts of the world. The maps below allow us to provide an initial definition of the economic areas of influence of the various ESPON countries, based on the share of the trade of each country with the European country in question. We will focus on the five largest ESPON countries (France, the UK with Ireland, Germany with Austria, the Iberian Peninsula countries, and Italy) as well as some other significant regional aggregates of smaller countries (Benelux, the Nordic EU countries, and the New Member States from Central Europe). Firstly, we can immediately note the large area of commercial influence of each ESPON country (or group of countries). The importance of the area of influence of each country seems mainly linked to its size (the most important areas are the ones relating to Germany, the UK and France), but also to its openness rate, to historical factors and to technological development levels (Italy, Spain, and Portugal have less important areas of influence than Germany, the UK or France). Secondly, one can easily see the differences in the configuration of the different area of influence. These geographical differences seem to be influenced by various factors:

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• historical and political relations ; • geographical proximity, even if this aspect is not easy to differentiate from

the preceding ones ; • type of exported and imported goods. This can be related to economic

structures, for example, German technology gives it a higher weighting in some developing countries of the Third World.

France is linked to the Maghreb and to former French colonial West-Africa whereas the British area of influence is more important with the USA and the Commonwealth. Spain and Portugal have special links with Africa and Latin America. The Benelux, apart from its strong trade with the Congo, has a European-oriented trade pattern. Italy’s trade is important with Europe, and notably with the Central Europe countries, but also with the Mediterranean area and Africa. The largest area of influence is however that of Germany (with Austria) since most of the world’s countries have at least 5 % of their trade with this country. We can however still distinguish a clear geographical pattern in German trade. The influence of Germany is comparatively more important in Central and Eastern Europe countries, in some parts of Africa, in Brazil and in some Asian countries. The extent of this area is related to the role of Germany in world trade, it is the third largest world exporter and its exports are of a high technological level. The global trade area of ESPON in terms of world trade is then actually the result of a simple addition of the various national trade areas which clearly cover different parts of the World through a kind of geographical specialisation. The idea that the “whole is better than the sum of the parts” is particularly interesting but it is important to use an important distinction here between EU 25 and ESPON 29 as countries which are not members of the EU 25 have developed original strategies of their own. This is particularly obvious in the cases of Norway and Switzerland (box 10).

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Map 65: Share of trade of each country with the different ESPON countries (or groups of ESPON countries)

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Box 10: Switzerland and the European Union

The EU is the most important trade partner for Switzerland - politically, culturally and economically. The EU and Switzerland are founded on common fundamental values such as democracy, a regard for human rights and the constitutional state. The EU is by far the most important trading partner of Switzerland: three-fifths of Switzerland’s exports are sent to EU countries, while four-fifths of Switzerland’s imports originate from the EU. Switzerland also has close contractual ties with the European Union. 1972 saw the conclusion of the Free Trade Agreement (for industrial products), while seven bilateral agreements were signed in 1999 in the areas of free movement of persons, overland transport, air transport, agriculture, research, and technical barriers to trade and public procurement. These bilateral agreements (Bilaterals I) came into force on 1 June 2002. Further negotiations in nine new areas (Bilaterals II) were concluded on the political level on 19 May 2004. From Switzerland’s point of view, globalisation possibly finds its greatest expression in the momentum of European integration. The consequences of globalisation and the progressive enlargement and consolidation of the European integration process are already evident in Switzerland today and it can be assumed that they will continue to intensify. Considerations of Swiss trends and future challenges are, therefore, inseparably linked to assumptions regarding overall international conditions. The central foreign policy questions and problems that Switzerland will have to confront in the coming decade have to some extent been part of the fields of Swiss foreign policy activities for many years. Swiss foreign policy is characterised by continuity and calculability. Switzerland will concern itself with most of the existing and future international challenges. It too will be required to reach political decisions and undertake social adjustments as a result. Switzerland has the strength and vitality to respond to these challenges independently. In so far as these challenges are of significance for foreign policy, it certainly cannot claim to have ready answers to every question. But one essential observation surely emerges: these global issues far exceed the capacity of an individual state to respond and find solutions. If Switzerland wishes to make any contribution to the realisation of global responses, it will only be able to do so in close collaboration with other states. In an era of ever tougher international competition in terms of location and market share, Switzerland appears to be in a good position judging from cross-sectional data, but judging from longitudinal data (development trends of productivity, investments, income, taxes, etc.) its position is less favourable. Unrestricted access to the EU market is vital for Switzerland’s economic development. Swiss exports obtained easier access to the European single market when the bilateral agreements came into force in June 2002, which provides some compensation. The traditional leading sectors of the Swiss economy (the chemical industry, precision instruments and watches, banking and insurance) are expected to maintain their competitive edge. They are the linchpins of economic prosperity. Rationalisation and restructuring will continue further, service industries such as banks, insurance and management consultancies will be affected. Certain traditional industries such as mechanical engineering and metal processing could experience a renaissance. Others are on the threshold of technological innovations (IT, communications). In the future there is likely to be increased demand in the health sector. It is anticipated that jobs are more likely to be created in sectors catering to the domestic market, which are less exposed to the pressures of international competition. International competition in the tourism sector between the different holiday destinations in response to the globalisation processes will remain and the changed security situation will have an influence on visitor figures. In the medium term, further restructuring and adjustment processes in this sector can be expected.

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6.2.2 Regional hierarchy in the world and European economies The level of economic “command” is an indicator of strong and solid immersion in the world economy. The dominant metropolises are those that command European and, to a certain point, the world economy. We present here two indicators of the economic level of “command”. The first is the location of transnational headquarters; the second is the location of advanced market firms’ offices. The former is a direct indicator of the leading role of the cities at the world and European level. Paris and London are clearly the largest world cities. Their position can be explained in a historical and geographical way. They are the capitals of very centralized states, which built major empires in the eighteenth and nineteenth centuries. London retains this imperial inheritance more than Paris, as the importance of the city in the world financial system remains strong. Randstad Holland appears to be the third European pole, which may initially appear to be surprising for a small European country. This is however obviously linked to its historical role in the development of European capitalism. The decentralization of the German structure appears very clearly on the map, since we observe at least five towns with a high number of major transnational headquarters: Frankfurt and Munich but also Stuttgart, Köln and Wolfsburg. Compared to the three other major European countries, Italy has a weak leading role in the world economy, which could be partially explained by the importance of small and medium-sized local enterprises in the Italian economy. The tri-polarity of the urban structure also appears clearly here with Turin, Milan and Rome the three leading cities. Outside central Europe, we can only observe some medium poles, namely, the Nordic capitals and Madrid, which functions as the centre of the fifth European economy. The second indicator concerns advanced market services firms, that is to say large international business services firms (see map 66), which are the key to the metropolisation process. Compared to the first indicator, this one brings much more easily into view all of the national and local sub-centres of the commanding networks of the European and world economy. Thus, in addition to all of the major leading towns, with London clearly ahead of Paris, we can also observe a large number of medium towns in Central Europe, as well as the capitals of peripheral countries, including those of the Eastern European countries.

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Map 66: Location of the transnational headquarters, 2005

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Map 67: Location of the offices of advanced services firms

Note: Advanced services firms are large international firms in the business services sector (for example consultancy firms)

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The fact that metropolitan areas are structural poles in terms of economic power is both the cause and the consequence of the fact that they are at the same time major nodes in terms of communications and networking. This can be demonstrated by the following analysis of air flows. 6.2.3 Air flows and gateway cities: differentiating or re-balancing the ESPON territory? Cities are the points at which the internationalization processes of a territory begin and materialize. The new “frontier” of the EU then can be conceptualised as several international gateway cities and not only traditionally as external borders of EU territory either at its Eastern or Southern limits. Moreover, the World metropolitan archipelago is not necessary connected to the states, regions or macro-regions where the metropolitan areas are located. Consequently, inter-city air flows help us to identify the main European gateway cities and to determine whether they have developed preferential linkages with other specific world cities or world regional areas, or on the contrary, whether they are involved in various multi-directional world networks. This study will show how a Gateway emerges and how a polycentric development could be consolidated that contributes to the differentiation or to re-balancing of ESPON territory. Air traffic is a synthetic indicator of various societal trends (tourism, business trips etc). It thus provides an indication as to the spatial integration of Europe in wider world networks as well as being a major indicator of European territorial dynamics. Many internal differentiations in the European space are related to the air flows that occur inside Europe on the one hand and between Europe and the rest of the world on the other. We propose here to integrate both dimensions in a synthetic typology of European Airports which is based on the volume of interactions between each airport of the ESPON 29 area with the rest of the World measured in passengers weighted by kilometres. As previously discussed (see Part B.2), weighting air flows by distance provides a better evaluation of global connections than the usual non weighted measure of passengers. The synthetic typology of global airports proposed in map 68 combines quantitative and qualitative information:

• The global importance of airports is described by the total number of passengers weighted by kilometres as was done previously in part B.2. Taking into account the huge differences between airports for this criterion we have decided to use a double square root transformation on the map in order to keep visible all airports which would not have been possible with the usual single square root transformation. The reader should therefore

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bear in mind that differences in size between airports are in fact much larger than they appear on the map.

• The geographical specialisation of connections established by each airport is determined by a cluster analysis applied to a division of the World into 16 destinations which are a mixture of WUTS2 (for remote territories in the Americas and the Asia Pacific regions) and WUTS4 (for ESPON 29 and its direct neighbourhood). Specialisations are defined as over- and under-representations of destinations as compared to the general profile of ESPON 29 presented in table 20.

Table 20: Main connections of ESPON 29 airports according to air traffic weighted by distance in 2000.

Territorial divisions Air flows weighted by

distance

Code Name billions of km %

Western Europe 734.0 43.8%

W1111 Northern Europe 196.1 11.7%

W1112 West Central Europe 263.0 15.7%

W1113 Southern Europe 274.9 16.4%

Rest of Euro-Africa 197.9 11.8%

W1121 East Central Europe 11.0 0.7%

W1122 Balkans & Turkey 35.6 2.1%

W1123 Caucuses & Dnieper 0.9 0.1%

W1124 Russia 7.9 0.5%

W1211 Maghreb 18.8 1.1%

W1212 Mashreq 37.1 2.2%

W1221 Northern Middle East 1.9 0.1%

W1222 Southern Middle East 26.1 1.6%

W13 Sub-Saharan Africa 58.5 3.5%

Rest of the World 745.0 44.4%

W21 North America 408.2 24.3%

W22 Latin America 85.2 5.1%

W31 South and East Asia 98.7 5.9%

W32 Western Pacifica 153.0 9.1%

Total 1676.9 100.0%

The proposed analysis helps to answer the following question: How do European gateway cities participate in the world metropolitan archipelago and contribute to differentiating or re-balancing the ESPON territory? A second crucial topic can also be added here, namely: Is the degree of international connection always

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related to the size of cities or is it possible to find specialised connections in cities of a smaller size?

The cluster analysis undertaken in respect of the geographical orientation of the air traffic of ESPON 29 airports reveals the existence of 3 major types (A,B,C) which can be further divided in 10 sub-types.

Type A: global gateways define cities creating global links between ESPON 29 and the rest of the World at long and very long distances, particularly toward s the Americas and Asia-Pacifica. Not surprisingly we find in this category the 6 major gateway cities previously identified in our SIR on the basis of the volume of international air flows and the ratio of international extra European traffic: London, Frankfurt, Paris, Amsterdam, Madrid and Zurich. But the new analysis provided in the final report helps us to clarify their respective international orientation and to suggest that it is possible to add other cities to the list of global gateways connecting ESPON with the rest of the World, including cities or airports of a relatively small size.

• The subtype “London” A.1 is characteristic of global cities with preferential relations with all long distance destinations, especially in North America, Asia, the Middle East and sub-Saharan Africa. This subtype can be found in the major airports of the Pentagon like London, Frankfurt, Amsterdam and Zurich but also in smaller airports like: Shannon and Krakow which display specific long-distance relations, mainly with North America.

• The subtype “Paris” A.2 is also characteristic of global cities but less so than the previous one because it introduces specialisations not only at long distance but also at medium distance with countries from the ESPON 29 ‘neighbourhood’, especially in the Southern and Eastern Mediterranean countries or in Sub-Saharan Africa. In addition to Paris, this situation can also be observed in Roma and Vienna.

• The subtype “Brussels” A.3 is clearly less global than the previous subtypes as long distance specialisations are limited to North America but do not appear for Asia or the Middle East. It does however remain highly specialised for connections with the ESPON 29 neighbourhood, especially for the Balkans, Turkey and the Eastern Mediterranean region. In addition to Brussels this type can also be observed in Munich, Milan, Warsaw, Cork and Dublin.

• The subtype “Madrid” A.4 provides a very good example of a specialised gateway, as its only specialisation is toward Latin America (but with an exceptional intensity more than 7 times the European average). Connections are also relatively important with North America and the Mashreq, but less so than for other gateways.

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Type B: central nodes, is characteristic of the majority of airports in the northern and central part of the ESPON area and also from some of the major cities of Southern Europe (Athens, Lisbon, Barcelona, and Naples). Their main characteristic is to develop important connections with Southern Europe or the Southern and Eastern Mediterranean countries but to be relatively sparingly connected to the rest of the World. They thus have a major role in the internal organisation of the Euro-Mediterranean region where they enable north-south connections to be exploited by tourist flows or by immigrant populations moving to and from their countries of origin.

• The subtype B.1 “Düsseldorf” is characteristic of German cities with important connections to Turkey and Balkans related to the presence of important immigrant populations from these countries. It can also be observed in the major industrial cities of the UK (Glasgow and Manchester) but rather in relation to tourist flows towards the Eastern Mediterranean region or to immigrant populations from the Middle East.

• The subtype B.2 “Stockholm” is similar to the previous one in terms of north-south connections related to tourism, but with specific flows more oriented towards Eastern and East Central Europe rather than the Balkans.

• The subtype B.3 “Newcastle” is observed in smaller airports which develop strong connections with Southern Europe but very few connections with the rest of the World (except Maghreb, Turkey and the Balkans). Tourism is the most important factor and the function of the regional integration of the Euro-Mediterranean area is clearly less important than in the previous cases of type B.1. and B.2.

Type C: Peripheral nodes is clearly the reverse of type B as it is characteristic of airports from the Southern part of the ESPON territory, including ultra peripheral regions such as the Azores, the Canaries, the Antilles and Reunion. These airports are characterised by their strong connections with Northern and Western Europe and by the global lack of international connections with the rest of the World, except in very specific situations. The cities associated with this type of airport are very often characterised by an important level of tourist activity and the importance of air connections is often simply the consequence of the huge movement of people from north to south during the holiday periods.

• The subtype C.1 “Palma de Majorca” is more connected to continental Europe than to the British islands or Scandinavia while also being somewhat connected to North Africa and East Central Europe. Paris, Frankfurt and Amsterdam as such play the role of major hubs for the connection of these cities to the Pentagon.

• The subtype C.2 “Larnaka” is mainly concentrated on the tourist cities of the Mediterranean coast which are strongly connected to Northern Europe via the major hub of London or by the airports of Scandinavia.

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• The subtype C.3 “Antilles” is specific to French ultra-peripheral regions which are mainly connected to the core of Europe by the national airport of Paris and which do not develop any other important relations with the rest of Europe or the rest of the World.

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Map 68: ESPON 29 Global Airports in 2000

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6.3 Strengths and weaknesses of ESPON regions confronted by globalization

The structural strength or weakness of ESPON’s regions will, in the main, be evaluated on the basis of their sectoral economic structure as well as on indicators of their technological level (productivity and technological patents). We have already presented the main hypothesises that will guide our work, particularly in respect of the structural features that could be seen as strengths or weakness in terms of economic competition. We will here use three main indicators. The first is the share of low-tech light industry. This segment of the manufacturing sector is that most subject to international competition from low labour cost countries. This is particularly true of the textiles industry, which has seen a significant decline in recent years. However, more refined analysis at the regional level clearly show that the decline of textile employment does not necessarily lead to a regional crisis, since some textile regions have a diversified industrial and economic structure based on a dynamic network of small and medium-sized enterprises (the “Marshallian districts”), for example the third Italy, or Western Flanders in Belgium. For Eastern Europe, the share of light industry should not lead to economic decline as Eastern countries currently benefit from the de-localisation of Western European textile enterprises. The second hypothesis is the share of financial and business services in the regional economy (total GDP). This is a clear indicator of regions with a leading and autonomous role in the global economy in which these types of services play a major role. Indeed, there is a correlation between this share and the level of internationalization, as it is illustrated by map 69 for example. The third hypothesis is the share of services dedicated to the local population, which includes non-market and market services, such as trade, and transportation etc. A high share of this type of service indicates a less open economy, an economy which is less related to the rest of the world. However, a part of these services could concern relations with the rest of the world, relating in particular to ports, airports, and international institutions. Moreover, this high share does not mean that globalization has no impact on these specific regions, but rather that they are less exposed to external shocks. In spite of these problems, it is the best available indicator of regional ‘protection’ from the globalization process. Finally, we tried to measure the technological level of regions by means of different indicators, particularly the number of patents and the share of high-tech

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manufacturing industries. We have already underlined (Hypothesis H2c) the importance of the technological level, since it gives the region a decisive advantage in terms of economic competition. For example, innovations and high productivity largely compensate for the higher cost of labour, at least in non labour intensive sectors.

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Map 69: Finance and business services in the regional added value, 2002

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6.4 Synthesis Finally, we propose to make an attempt at a qualitative typology of regions by crossing the different aspects of the strengths and weaknesses of the regions in relation to the globalization. Three main aspects have been considered, in accordance with the main hypothesises: internationalization, structural strengths and weaknesses, and technological levels. For the first and the third aspects, we produced a single synthetic indicator with the different indicators of each of these two aspects. For internationalization, we considered airflows, transnational headquarters, exterior immigration and offices of advanced services firms. The technological level was synthesized on the basis of three indicators: number of patents per inhabitant, productivity (added value per worker), and the share of high-tech manufacturing industry. To produce synthetic indicators, we conducted two principal component analyses (PCA), one for each theme. For internationalization, the first principal component takes into account 62% of the total information, while for technologies, it takes only 51% of the information into consideration mainly because productivity is not well correlated to the two others indicators and is thus taken into account more by the second component of the analysis. The first components of these two analyses were used as synthetic indicators of these two aspects. Tables 21 and 22 show the correlation between the different initial variables and the first component: the internationalization indicator (component 1 of the first analysis, see table 21) is very well correlated with the air connections to the cities of the rest of the world, the number of advanced service firms and the location of headquarters, while the migratory balance is taken less into account by the first component; the technological synthetic indicator (component 1 of the second analysis, see table 22) is mainly correlated with the number of patents per inhabitant and with the share of high-tech manufacturing industry, and only weakly with the rough measure of productivity we used. On our synthetic map, we use the “internationalization indicator” to distinguish those cities that are highly connected to the rest of the world, and the “technological indicator” to differentiate all regions on their technological capacities. In addition to this information, we added the structural features that could have strong impacts at the regional level, regarding the regions’ possible reactions vis-à-vis the globalization process. The share of business and financial services has not been added since it is fundamentally correlated to our “internationalization indicator”. On the contrary, the share of light low-tech

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industry, highly subject to world competition, and services dedicated to the local population are superimposed on the other pieces of information.

Table 21: Correlation between internationalization indicators and the component 1 of the PCA analysis

Component 1

Exterior air flows/inhab 0,892

Exterior migratory balance 0,477

Number of offices of advanced services firms /inhab 0,807

Number of headquarters of transnationals/inhab. 0,904

Table 22: Correlation between technological indicators and the component 1 of the PCA analysis

Component1

Patents/inhab. 0,881

Added value/ employment 0,243

Share of high technological manufacturing industry 0,859

The resulting synthesis allows us to isolate four major types of regions, according to their relations with the rest of the world: 1 – The highly internationalized metropolitan regions. This includes most of the major ESPON cities which are distinguished by a high level of internationalization, a high share of financial and business services and a leading role in the European and world economies. Our indicator allows us to distinguish between the metropolises in terms of the function of their level of internationalization. At the first level, we can distinguish the largest world metropolises of London and Paris and some very internationalized less important cities. These cities are the gateways between Europe and the rest of the world. 2 – Central regions of Europe, the “blue banana”, without large international metropolises. Most of these areas are characterized by a solid economic structure with a relatively high share of business and financial services, as well as a high technology level. This type also includes southern Sweden. 3 – Peripheral and intermediary regions with a high share of personal services. These regions have low average technological and internationalization levels. These regions are mainly specialized in services dedicated to the local population, which means, to a certain extent, a relative indifference to the rest of

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the world. These regions are often more dependant on national or European transfers 4 - Peripheral and intermediary regions with a high share of low-tech manufacturing industries. Compared to the previous categories these regions are more subject to the vagaries of international competition, notably in the textile sector in relation to low cost labour countries. However, in Eastern Europe, these regions mostly benefit from the ongoing spatial reorganization of this sector.

Map 70: Synthesis of the regional insertion in the world economy

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Box 11: The impact of re-localisation on the position of ESPON regions in value chains: The example of the textile value chain in three Marshallian

districts.

Globalization is supposed to have important impacts on Europe and, as a hypothesis, on its internal differentiation. The general idea is that the growing economic openness of Europe will have differential impacts at the regional level in respect of the vulnerability or strength of a region as it relates to the nature of international competition. The textile industry is a perfect example in trying to link ESPON regions to the rest of the world. General agreements on trade have increasingly diminished the economic protection of European textiles, and this sector is subject to intense competition from the low labour cost countries. The reactions of the textile regions to this growing competition are very interesting because they clearly illustrate the ability of some, the so-called Marshallian districts, to progress despite their structural weaknesses. Marshallian districts are very dynamic territorial systems characterized by a dense network of interconnected and very specialized small and medium-sized enterprises, generally oriented to light industry (Colli, A., 1998). They emerged in very specific historical contexts. Firstly, most of these districts have a long tradition in the textile industry, clearly pre-dating the industrial revolution. Regions like the interior of Flanders, Cholet, and Central Italy had an important ‘cottage’ industry from at least the eighteen century. Secondly, as we noted previously, these regions have constructed a dense network of small and medium-sized interconnected enterprises using subcontracting etc, and are often based on strong informal relations. These enterprises are thus fully engaged in a complex dialectical process of cooperation and competition. This very flexible organization is able to quickly answer changing levels of demand in the market. Thirdly, these districts have been able to strengthen their initial success thanks to a long-term strategy of seeking to rise in the technological value chain of the textile industry, with innovations that could be dispersed through the entire regional industrial network (Scherrer F., Vanier M., 1995). Finally, we observe that in most of these areas specific social features, notably what we could call an inter-class “common agreement” have become rooted. In concrete terms this means that worker and manager share the same social and ideological framework. These areas display a relatively weak level of economic performance (Prato district in the third Italy, the areas around Kortrijk in Belgium, the Herning-Ikast district in Denmark), slightly below the national average, except for the Herning-Ikast district. This relative slowing down is interesting as these areas have shown strong economic performance for much of the previous decades, as indicated by their high level of GDP/inhab. It seems that, all things being equal, these specific districts are coming to the limit of their performance. But, this should not be exaggerated: firstly, economic performance is barely below the national level (it is thus more a relative decline than a real crisis); secondly, unemployment remains very low; finally, this tells us nothing about the causes of the process and it seems that economic performance remains relatively good if one considers the structural weakness of these districts because of the high share of declining industrial employment. In conclusion, it appears that most of the Marshallian districts still display a relatively decent level of performance in the actual context of the crisis of their specialization.

Table 23: Economic performance of some regions including industrial districts, 1995-2002 (National level is between brackets)

Average annual

growth 1995-2002

Level of GDP/inhab in 2002 in % of

European level

Unemployment

South of Western Flanders 4,54 (4,66) 119,5 4,5 (8,4) Prato 3,57 (3,93) 128 5,6 (8,0) Ringkoebing 5,19 (4,94) 123 4,7 (5,5) Source : Eurostat

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Box 12: Pattern of migration in Europe

Migratory movements have occurred since pre-historic times. Distances, origins and destinations may have changed and the same is true for the numbers of migrants and the motives behind the decision to move.] International migration is part of a trans-national revolution, which is reshaping societies and politics around the globe. Over the last few decades, four major areas of immigration have emerged: North America, Australia, Western Europe and the Arab oil countries. Historically, countries like the USA, Canada, Australia, New Zealand and Argentina have been the target for large scale immigration. Over the past 20 years the USA, Canada and Australia have experienced new large scale immigration, particularly from Asia and Latin America. Northern and Western Europe experienced a large scale labour migration between 1945 and 1970. Today this area attracts mainly immigrants from Africa, Asia, Latin America and the Caribbean Islands. The oil-rich Gulf countries, particularly Saudi Arabia and Kuwait, have become major magnets for immigrants from the Arab world, Africa and Asia since the rocketing oil prices in the 1970’s (Castles & Miller 1994).

When comparing these global migration movements, Castles and Miller (1994) identify four general tendencies, which are likely to play a major role in the coming 20 years. The development discussed by Castles & Miller (1994) is to large extent confirmed by the OECD (2004). (i) Globalisation of migration: the tendency is that more and more countries are affected by these migratory movements. The immigrants come from countries further away from the host country and the immigration countries host entrants from a broad spectrum of cultural, economic and social backgrounds. (ii) Acceleration of migration: migrations are growing so rapidly in volume in all major regions at the present time, which only increases the difficulty for and the urgency of workable government policies. (iii) Differentiation of migration: most countries do not have one type of immigration – e.g. labour immigration, refugee immigration, family reunion immigration, student exchange programmes or permanent settlements – but a whole range of them. This differentiation presents a major obstacle to national and international policy measures. (iv) The Feminisation of migration: historically, labour migration and refugee migration was dominated by males, and family reunion migration by females. Since the 1960’s this has begun to change. Today women constitute a majority of the world labour migrants and the share of women amongst refugee migrants is increasing.

Migration flows tend to follow previous migration flows. Countries with former colonies, e.g. France, the U.K. and Portugal, attract migrants from their former colonies, and countries with a former demand for labour immigrants, e.g. Germany, attracts immigrants from the former sender countries of labour migrants. Ethnic minorities in neighbouring countries also try to migrate to their country of origin, e.g. ethnic Hungarian migration to Hungary and ethnic Russians migrating to Russia.

Just as there are positive aspects of labour immigration, there are also negative aspects: it can counteract the structural transformation of the economy, as stagnating trades and sectors can be kept afloat through access to cheaper labour, something which ultimately hampers their productivity and their international competitiveness.

The existence of dual labour markets in combination with irregular migratory movements stimulate results in a situation where the migrants fill the “three D” jobs – jobs that are dirty, dangerous and degrading. These are jobs that natives are not willing to take and despite unemployment in the destination country – at least in developed countries – it seems to be relatively easy for migrants to find jobs in the “three-D” labour segments (Taran, 2005). On the other hand, foreigners in these sectors are more vulnerable to economic fluctuations and unemployment than nationals. This seems, however, to be not merely a business cycle phenomenon – instead there has been a long-term rise in the share of unemployed foreigners compared to nationals over the past decades. It also seems that it is more difficult for foreigners to find a new job when better times come along. Low-skilled, manual workers – often males – in declining sectors and branches seem to have little chance of being re-employed (OECD 1997, 2004).

Recent research indicates that these European immigration flows are headed for the “heptagon” London-Hamburg-Munich-Milan-Paris-London, while peripheral parts of the European Union face population decline and depopulation (ESPON 1.1.4, 2005). The immigration flows aim, in general, towards the metropolitan areas (Vandermotten et al. 2004). Many of the European Union’s new member countries are considered to be potential senders of labour. The effects of ageing are so marked in these countries that a majority of the immigration to the European Union must be directed to the new member countries (Gaspar et al. 2005).

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6.5. CONCLUSIONS The synthesis of the regional insertion of the ESPON region into the world economy and the typology of gateway cities that we have elaborated in this final section of the report cannot be considered as definitive results as their elaboration was based on a limited number of criteria. Better results could be obtained in the future if, for example, international trade statistics can be obtain for the regional level or if coherent time series could be analysed concerning the evolution of air traffic linking European cities to the rest of the World. The current set of results does however uncover some important findings in accordance with the objectives of the ESDP. ♦ Globalisation tends to increase the economic inequalities between

European regions. The metropolitan regions of the Pentagon where the major gateway cities are localised are actually the most likely to benefit from the opening up of ESPON territory to internationalisation. Their structure of activity is not vulnerable to globalisation, on the contrary, it benefits from it.

♦ Globalisation does not necessarily have negative effects on all

peripheral regions. Depending on their economic specialisation, some peripheral regions can benefit from the development of tourist flows or from the relocation of traditional industrial activities for which they display comparative advantages in terms of their labour force. The problem is of course to evaluate the time period for which this advantage will be maintained as there is a clear delocalisation toward towards more and more peripheral locations.

Taking into account the actual bottlenecks which limit the ability to propose a precise statistical picture of the strengths and weaknesses of the ESPON territory in light of globalisation, we have tried to complete our research by means of more detailed case studies on specific industrial sectors such as textiles (Box 11), on specific countries like Switzerland (Box 8) or on specific flows, like the regional impact of international migrations which cannot be evaluated for the whole of the ESPON region but which can be presented in specific situations. The same is true for regions located along the eastern border of ESPON territory which suffer from specific problems and for which we have elaborated specific analysis summarised in Part C. with the examples of the Baltic countries (Box 5), Romania (Box 6) and Hungary (Box 4). The reader is therefore invited to pay particular attention to volume C of the report where the complete results of this case study are presented in more detail.

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7. CONCLUSION

Is this the Region, this the Soil, the Clime, Said then the lost Arch Angel, this the seat That we must change for Heav’n […] Hail horrours, hail Infernal world, and thou profoundest Hell Receive thy new Possessor: One who brings A mind not to be chang’d by Place and Time J. Milton (1674), Paradise Lost, I, 242-254

After 18 months of intensive work on this unexpected53 ESPON project 3.4.1 “Europe in the World”, what have we learned and what are the main recommendations that we can propose to the community of policy-makers concerned by spatial planning in the European Union and in its neighbouring countries? Looking back to the initial ambitions of this project as they were described in the introduction of our first interim report (FIR, pp. 16-35) we are obliged to admit that there remains a lot to be done for those who will follow in our footsteps in the context of ESPON II, and that this pioneering work thus represents, to paraphrase Winston Churchill, ‘the end of the beginning rather more than the beginning of the end’ as far as the broad themes covered in this report are concerned. Without trying here to summarise the different conclusions obtained on each key-question and the related policy recommendations (see. conclusion of Parts A, B, C and D of the present volume) we would prefer to focus this conclusion on a specific problem that we have voluntary excluded throughout the previous discussion and which is related to the definition of “Europe”. Looking back at the different chapters of our final report, the reader has probably noticed that, each time that it was possible, we have excluded the fuzzy word “Europe” from our vocabulary and used terms like “European Union (15 or 25)” or “ESPON 29” which are more precise from a geographical point of view and are based on a legal or institutional reality. Of course, we were on occasion obliged to use the term “Europe” for the description of geographical subset of states (“Northern Europe”, “East-central Europe”, etc.) or when we discussed the common sense perceptions shared by a majority of people in our research on mental maps. We tried assiduously however to avoid any usage of this term “Europe” on our own part.

53 The topic “Europe in the world” was not present in the initial work plan of the ESPON project launched in 1999. It is only following internal discussion at various ESPON meetings that the idea for such a project was progressively accepted, tested (in the framework of ESPON project 3.1) and finally launched in a tender in 2004.

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Like Georges Perec who produced a novel without the vowel “e” (La Disparition, 1969) and then another with only the one vowel - “e” - excluding all the others, “a”, “i”, “o”, “u”, “y” (Les revenentes, 1972) we will try in this final conclusion to completely change our previous approach and accept the task of saying something about ‘Europe’ rather than just ESPON 29 or the European Union. 7.1 The false problem of the boundaries of Europe …

BOUNDARY, n. In political geography, an imaginary line between two nations, separating the imaginary rights of one from the imaginary rights of the other. Bierce, A., Devil’s Dictionary, 1911

In the 1970’s and 1980’s, many people located in the little cap off the western extremity of the continent of Asia used the term “Europe” in order to describe a territory which was certainly not a continent in the usual geographical sense (see. A.2) but was simply a political and economic union between old nations linked by a common history, evolving progressively from6 to 15 states. Other people, located also in this western extremity of Asia – but not so far west - complained at the same time that their western neighbours did not have a monopoly on the usage (and heritage) of “Europe” and requested also for themselves this belonging in the perspective of a future “return to Europe” (Kundera M., 1984). They were of course under the domination of a large country located in what H. Mackinder had called, in 1904, the Heartland of the World while claiming nonetheless another future oriented to the Rimland of the oceanic countries. Their western neighbours tried to satisfy this request by calling them “Eastern Europe” but the eastern neighbours preferred to be called “Central Europe” in order to avoid confusion with this famous Heartland which had obtained a belonging of sorts to this mysterious “Europe” in the 18th century. The conventional eastern border of Europe accepted now as “natural” is indeed a very recent construction. The thorny problem was formally solved by Vasily Tatischev, the geographer of Peter the Great. In 1730, he suggested the Ural mountain range as the physical representation of the continental border. The fact that this eastern delimitation was established for purely political reasons (the will of Peter the Great to develop the western relations of Russia with the foundation of Saint Petersburg) has been apparently forgotten by many actual policymakers who still speak of “natural borders” to the East (the Urals) and to the South (the Mediterranean Sea). Neither of these are “natural” borders, indeed the Mediterranean Sea has been a channel of communication between civilisation rather than a border for millennia (Braudel F., 1984).

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Once admitted the fact that neither geography nor history or any other “cultural” criteria can provide any objective and relevant delimitation of Europe, it is easy to conclude that the delimitation of borders of Europe is a false scientific problem. But at the same time, it remains a real political challenge because territorial belonging to “Europe” is used as a condition for countries wanting to join the European Union54. Article I.58 of the constitutional treaty state indeed stated that “The Union shall be open to all European States which respect the values referred to in Article I-2, and are committed to promoting them together” but nowhere is it explained what a “European state” is or could be.55 The reader can probably appreciate now how important it was that the ESPON 29 programme provided us with an initial geographical definition of “something that could be Europe without being Europe”. Working on a project funded by the 29 states of ESPON, we did not have to start our work by coming to any precise definition of Europe and thus we could simply work on the basis that the real name of the project was in fact “ESPON in the World”. Was it really a problem? As in the case of the functional delimitation of cities, it was necessary of course to start from an arbitrary core area which could be either too small or too large but would be further redesigned according to our analysis of flows, similarities, and networks, etc. The choice of the initial core area was ultimately not very important in the framework of the systems analysis that we had chosen. Furthermore, it was clear that our target was not to establish precise limits when trying to delineate a European functional area which would necessarily need to be fuzzy and organised on various levels of integration as explained in Box13. The results obtained, especially in parts B and C, prove that the various theoretical concepts of the environment proposed by Wallisser (1977) fit perfectly into the central problem of the project of ‘Europe in the World’ which was the definition of the influence of globalisation on the spatial organisation and future trends of the European territory. We have indeed demonstrated that the economic core of ESPON territory is smaller than ESPON 29. Western Europe (the former EU 15 plus Switzerland and Norway) is surrounded to the East and South by a ring of strongly integrated (on the basis of multiple criteria) states which is larger than ESPON 29. It is true that political and economic integration has taken place in the main in an easterly direction (with the enlargement from 15 to 25) 54 Or the ESPON Programme. It is after all very strange that Turkey has not been invited to join the ESPON Programme as it is now an official candidate country. 55 This is perhaps the crux of this most contentious issue. This situation in respect of future accession was however basically resolved in 1993 with the adoption of what later came to be known as the ‘Copenhagen Criteria’ for EU entry, which basically stated that prospective entrants must be liberal democracies in which the rule of law is respected; have functioning market economies that can cope with the competitive pressures of the market forces of the Union; be capable of implementing the acquis communitaire; and be willing and full participants in the EMU and CFSP. As such, entry was now, ostensibly at least, to be based on rational/functional rather than cultural/identity-based criteria.

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but in functional terms very strong links, effective or potential, also exist with North Africa, the Balkans, Turkey and probably also Russia.

Box 13: Definition of the environment of a system

The environment of a system is that part of the universe that is in communication with the system, but is not part of the system. According to the existence of input and output flows between a given system and various areas of its environment, it is possible to distinguish between three different situations (Figure 5). • The integrated environment of a system is a part of the rest of the universe which is at the same time influenced by and an influence on, the system. • The active environment of a system is a part of the rest of the universe which exerts an influence on the system but is not influenced by it. • The passive environment of a system is a part of the rest of the universe which is influenced by the system but has no influence on it Another important distinction here has to be made according to the level of input-output flows which connect a system to its environment: • The specific environment is the part of the rest of the universe which can be considered as important for the analysis of a system, according to a given threshold of input and outputs. • The global environment is all that which can be theoretically connected to the system by input-output flows but which can be practically neglected according to a given threshold.

Beyond this integrated environment of Europe, the situation is more complex and our analysis has helped to establish an important distinction between an active environment which deeply influences European territory but is not, itself, really influenced by it (Japan, China, the United States, and the Persian Gulf) and a passive environment which is strongly influenced by Europe

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without being able to influence it (Sub-Saharan Africa). Notwithstanding this extreme situation, many of the territories of the world define a more global environment for Europe in this context, existing in an intermediate situation of medium level relations with Europe, without the clear domination of one partner by another. This is the case for major emerging states like Brazil, Argentina, India or Iran which are potential partners for Europe in the future. Europe has then to develop a global strategy towards the rest of the World but, to do so Europe must firstly reinforce its links with its local ‘neighbourhood’. The main challenge for the near future is therefore the development of an integrated Euro-Mediterranean or Euro-African World region (Beckouche P., Richard Y., 2005), in the framework of a “North-South” regionalism which would benefit from the obvious complementarities that exist between both shores of Mediterranean Sea. Looking at what is actually happening in North America (Azuelos & al, 2004) or in East Asia (Dieter H., 2006) we consider that the future of Europe would be fundamentally undercut if such a strategy were not to be strongly developed in the near future. It is probably the only solution to realistically achieving the goals of the Lisbon Strategy while also ensuring the future rank of Europe as global actor. The development of north-south regionalism does not necessary mean that Europe should enlarge politically toward the south and fix a new border on Sahara56. Political enlargement is but one tool among others. The political and institutional question is secondary and what is really at stake is the elaboration of a kind of “Marshall Plan” for the Southern and Eastern neighbours on the one hand, and for sub- Saharan Africa on the other. As in the case of the original “Marshall plan” such action would not necessarily be based on charity but rather on pragmatic consideration in the common interest of both partners (Hogan M., 1987). 7.2 The real problem of a multilevel approach

Car enfin qu'est-ce que l'homme dans la nature ? Un néant à l'égard de l'infini, un tout à l'égard du néant, un milieu entre rien et tout. B. Pascal, Les pensées.

The final contribution of systems theory to the theoretical framework of the “Europe in the world” project relates to the concepts of sub-systems and levels of hierarchical organisation. If we consider the European Union (or the ESPON area) to be a system, we can define the level of this system by a certain number of

56 Even if it would not be very different from what happened in the 18th century with the movement of the eastern border toward the Urals.

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quantitative parameters (population, GDP, diplomatic influence) or qualitative parameters (international organisation of states, economic zones of integration, cultural areas etc,) which can be summarised in the general category of “World region”. According to various possible criteria available at world scale (mental maps, political alliances, air and trade flows, economic demographic and social structure, dynamics etc) we have tried to check the consistency of these “world regions of Europe” and to propose a benchmarking exercise with equivalent World regions. Looking at economic criteria we clearly identified two other “World regions” on the same level as Europe, namely, North America and East Asia. These three areas define the “Great Triad” which is a major factor in the organisation of the contemporary World and which supports the idea of a centre-periphery organisation (Vandermotten C., Marrisal P., 1998). We also demonstrated that the contemporary world cannot however be reduced to this model which is relevant but not complete for several reasons. Firstly, it appears than many parts of the World are becoming increasingly independent of the “Great Triad” of the Northern hemisphere. The “Little Triad” of the Southern hemisphere (Mercosur, Southern Africa, and Oceania) is not a simple relay or symmetric replication of the Great Northern Triad but rather the place where new world regions are actually emerging. The same is true for India which will be without doubt the core of a powerful world region in the near future. Moreover, the Middle East and Central Asia are also future potential cores of the world economy even if it they are currently the major geo-strategic battlegrounds in our contemporary world. Secondly, the “territorial vision” of the world which is implicit in the classical view of the centre-periphery model has to be balanced by an alternative “network vision” which is based on the existence of “global cities” (Sassen, 1991) or the “world metropolitan archipelago” (Brunet, Dollfus, 1992) which are more connected to each other than to the states or places where they are located. For some authors like P.J. Taylor (2000, 2005), the internal organisation of the “global city” reproduces in fact the classical division of the world into three areas of influence which are not very different from the classical paradigm of the Triad (Figure 29). But other authors like N. Cattan (2004) or P. Veltz (1996) argue that the network is more important than the nodes and that what does really matter is not to measure the “size” of world cities but rather the degree of inter-connection that they provide between different parts of the world and at different scales. Following this approach, we have established that European territory is certainly well connected to the rest of the World by six major gateway cities (London, Paris, Amsterdam, Frankfurt, Zurich and Madrid) but that it can also rely on external gateways which enable more specific connections with the

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neighbouring countries, in particular, Istanbul, Tel Aviv, Dubai or Moscow. Moreover, it appears that the internal integration of the European territory is based on major “north-south” relations which are serviced by many airports of very different size and which connect northern Europe to both shores of Mediterranean Sea. This means that between the global level and the national level, it is also possible to identify an intermediate situation of regional networks which are specifically able to organise subparts of the world and contribute to the development of North-South regionalism. Miami obviously plays this role of north-south connector in America but the situation is less clear in Europe where the pattern is more complicated: Madrid enables preferential connections with Latin America, Paris with North and West Africa, London with the Persian Gulf, Frankfurt with Central Asia, and Ljubljana with the former Yugoslavia, etc.

Figure 29: Regional world cities and their spheres of influence

Source: P.J. Taylor (2000)

A major output of our research for the practice of ESPON policy-makers and researchers is the introduction of a supplementary level in the actual “3-level approach” which has been elaborated by ESPON. Europe, whatever its delimitation, is indeed not an isolated system and the global level should always be taken into account in order to obtain a complete view of the nested relations which take place at all scales (Figure 30)

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Figure 30: Hierarchical organisation of the system and sub-systems

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7.3 One World, millions of places

All the world's a stage, And all the men and women merely players: They have their exits and their entrances; And one man in his time plays many parts. W. Shakespeare, As you Like It, 2-7

In a famous paper entitled “One World, Millions of places: the end of History and the ascendancy of Geography”, the British geographer R.J. Johnston (1994) suggests that Fukuyama’s concept of a relatively homogeneous world does not mean a parallel end to Geography as predicted by O’Brien (1992). On the contrary, it suggests that the importance of space and place is increasing in the structuring of the contemporary world, thereby providing a challenge for political geographers. Johnston’s conclusion is that “Space is both an opportunity and a constraint to capitalism’s operations; political geographers, in appreciating this, could build a much more convincing case for the ascendancy of Geography than Fukuyama has for the end of History.” The analysis realised in the framework of this ESPON Project 3.4.1. has clearly confirmed that, whatever the time-space compression and the reduction of transportation costs, distance in the narrow sense of physical proximity and territorial contiguity remains a major factor in the organisation of flows in the contemporary world. According to Krugman (2004), “what seems to have emerged from the empirical work of the past dozen years is a compromise vision. Distance matters a lot, though possibly less than it did before modern telecommunications. Borders also matter a lot, though possibly less than they did before free trade agreements. The spaceless, borderless world is still a Platonic ideal, a long way from coming into existence”. The idea of the abolition of distance and “end of geography” is a dangerous illusion for European policymakers but also for those European firms actually investing funds in remote the territories of Eastern and Southern Asia. Our analysis of the so-called “European influence area” suggested clearly that it investing in remote countries (like the those along the diagonal between the Persian Gulf and East Asia) represents a very great challenge for Europe as this is the area where Europe’s influence is at its lowest ebb in the World. Globalisation does not mean the abolition of borders but rather the reallocation of national borders to an upper scale which is that of the world region. The globalisation and regionalisation of the world have been parallel processes (GEMDEV, 1992) and are as such clearly interlinked. According to Mashayekhi M. & Ito T. (2005) regionalisation, and more precisely North-South regionalisation is crucial as (i) it produces more

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trade creation than trade diversion and (ii) it is the best way to help the development of those countries from the South (if certain conditions are fulfilled, in particular limiting the asymmetry of relations) as it helps them to open their economies and to thus further stimulate South-South relations through further ‘virtuous loops’ connected to the development of intra-regional trade associations. There is, finally, a curious dialectical relationship between the progression of knowledge about the European territory realised within the context of ESPON and progress on our knowledge of the actual progress of globalisation. On the one hand, European Spatial planners who generally focus on the local and regional scales cannot ignore the fact that world trends have a direct impact on the smallest territorial units and thus that they can no longer seek to develop projects or policies without considering regional, national, European and now also world structures and networks. On the other hand, DG Relex or DG Trade, theoretically concerned in the main with the analysis of the situation of Europe in the World probably has something interesting to learn from DG Regio and ESPON, because the tools and concepts which have been elaborated for the analysis of the internal integration and cohesion of the European territory can be useful for their own practice if they are transposed upwards to the world scale and/or ‘neighbourhood’ scales. As a very simple example, the reader should look again at the transposition at world scale of the analysis of regional discontinuities which was initially applied to the internal differentiation of the European territory in ESPON project 3.1. Instead of mapping the differences of GDP/inh. between NUTS 2 regions, we have produced here maps of the differences in the Human Development Index in 2002 across 168 states of the world. The criteria and the scale are clearly different, but interest in respect of the tool remains obvious as the location of the main developmental discontinuities at world scale relates very much to active international borders in terms of economic and demographic flows. Focusing on the European ‘neighbourhood’ we have observed that the spatial transitions between Western Europe and its Eastern and Southern peripheries are completely different with a regular gradient in the Easterly direction and double lines of discontinuity to the South (one on the Mediterranean Sea and the other on the Sahara) which define a clear “buffer area” corresponding to the Maghreb countries. We propose therefore to conclude this research by restating the parallel between the growing importance of the regional level at both the world and the European scales. As demonstrated by the French economist J.M. Siroën (2000), the debate over the economic benefits of multilateralism and regionalisation at world scale is a false one because both forms of global integration are in fact complementary.

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What is really important is not the liberalisation of trade (which is not an objective in itself) but rather “the question of defining the scale where public goods and services can be produced the most efficiently according to the cost and the preferences of societies for certain specific characteristics which are often associated with geographical territories.” The European reader will easily recognize the principle of subsidiarity here which is the basis for the political organisation of the European Union. If the European Union and regional authorities across Europe want to be recognised by European citizen as new, and meaningful, levels of social and political organisation, they will have to prove that they are better able to ensure the efficient and equitous allocation of public goods and services than national states. In this respect, the development of spatial planning at both the European and local scales could certainly be a major factor in the legitimisation of the European project if it focuses on territorial cohesion and the development of public services and not only on economic competitiveness as is basically the case with the current interpretation of the Lisbon Strategy. Taking into account the ESPON ‘neighbourhood’ then in the context of ESPON II and developing better spatial analysis approaches are clearly fundamental conditions for further progress.

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ANNEX 01: REPORT ON NETWORKING Internal Networking: The ESPON project 3.4.1. involved since the beginning a very important number of research teams of different countries with two leading partners (RIATE & Géographie-cités), 4 core partners (LADYSS, IGEAT, ITPS, Herriott-Wyatt University) and 5 expert teams (CRH-HAS, TIGRIS, ETH, Gruppo SOGES, CASA). This diversity was indeed necessary, due to complexity of the subject and the choice to combine global quantitative analysis with more qualitative case studies on selected subjects. Two problems occur, both with British partners.

- In the case of Herriot-Wyatt University, the departure of Cliff Hague from his university, introduced the removal of a core-partner and the contract was broken as Herriot Wyatt University was not able to propose researcher able to replace Cliff Hague. The budget was therefore reallocated to other research teams which realised the work initially supposed to be done by Cliff Hague (dictionary of concepts, analysis of environmental questions, global integration zone…).

- In the case of CASA, the expert was not present at any meeting and they

did not sent any scientific results, out of a preliminary version of their case study which did not fit with the expectations. One more time, the contract was broken and the money reallocated to other project partners.

The removal of our both British partners implies that the project had no researcher which was native English speaker which was a crucial problem for the rewriting of the report. But a solution was hopefully found (see. next section). Dynamic enlargement of the research group A new research team was involved in the project after the beginning with ORMES, a research team from Morocco which provide an expert case study on southern external border of ESPON. This was a very difficult problem to involve this team from administrative point of view, but it was a very precious input for the project (especially about neighbourhood), and a precious symbol for ESPON project in general and ESPON 3.4.1. in particular. On the final map of research teams having contributed to ESPON program, a small dot will appear in Agadir, saying that European Union is not always turned to its internal problems and can also have a look at what is around! We are very grateful to our project officer and to ESPON CU to have agreed to this extension of the network after the beginning of the project.

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External networking with other ESPON project

- A structural link exist with project ESPON 3.1 which had initiated the first research on Europe in the World with a first small atlas of 12 maps and an evaluation of the interest and feasibility of the project.

- A very strong link was established between project 3.4.1 “Europe in the

World” and project 3.2 “Scenarios”, because it appears quickly obvious that projection or prediction of future trends are necessary based on an enlargement of the area of investigation. The more you want to go far in the future, the more you are obliged to enlarge the geographical scope. In this partnership, project 3.4.1. provided many material to project 3.2 but received also precious advices, especially in the field of enlargement and neighbourhood policy. Chris Smith (Nordregio) which was specialist from political topics in 3.2 was invited in the meeting of project 3.4.1 and provided many crucial inputs and critical comments. Finally, Chris Smith was involved as expert in project 3.4.1 for the final reviewing of language (as he was native English speaker) and for a general comment of political topics (as the project had no specialists from this question). Reversely, Claude Grasland who was leader of project 3.4.1. but partner of project 3.2 provided many materials to scenarios, especially in the field of demographic trends and north-south regionalism.

- Other links was established with different projects (for example

polycentrism or demography) but rather in the form of reading the reports and not by direct face-to-face contact, except during the lead partner meetings or ESPON seminars.

Networking with ESPON CU As mentioned above, excellent relations with ESPON CU during all the project. Our project officer (S. Di Biaggio) was invited to internal meeting of the project and the financial questions was very efficiently solved by direct face to face contact between S. Ferrara (ESPON CU) and I. Salmon (RIATE) which met several time in Paris or during ESPON seminars.

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ANNEX 02: SCIENTIFIC SUMMARY A) Methodologies used Thematic synthesis on a particular field has been based on the use of models who integrates flows and structure in a systemic way. A.1. Structural synthesis Multivariate analyses have been either applied to a homogeneous table of economic variables or to a table combining social, economical, demographical and environmental data. A.2. Flows synthesis The various types of flows are not independent from each other and correlation or causal relation can be established between various types of flows. Problems appeared in the case of introduction of a historical dimension in the analysis of a given type of flow. As limits of states are changing through time, it is not possible to introduce any historical dimension in the analysis of flows without geographical aggregation of territorial units. In many cases, due to lack of information and difficulty to harmonise various types of criteria, will we limited our synthesis to the comparison of qualitative variables indicating if flows are, for example “High”, “Medium” or “Low”. Those typologies introduce a dramatic reduction of initial information but are probably the most efficient solution for cross-thematic synthesis of flows in the context of our project. B) Indicators & typologies Number of spatial indicators used

- in total: 24 - covering the EU territory: 5 - covering more than the EU territory : 19

Number of spatial typologies applied:

- in total: 14 - covering the EU territory: 5 - covering more than the EU territory : 9

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C) Concepts No specific concept has been developed in the ESPON project 3.4.1. “Europe in the World”. About 12 concepts have been used: Integration Zones, Centre / Periphery, Regionalisation, Polycentrism, Gateway (cities), Area of influence, Barrier Effect, Neighbourhood, Territorial cooperation/competition, Territorial Cohesion, International Division of Labour, Territorial / Spatial differentiation. To allow partners to have a homogeneous use of those concepts a dictionary of concept has been developed in the volume two of this report. Definitions are based on scientific papers and other reports of the ESPON program. D) Maps 228 maps have been made for the ESPON project 3.4.1. “Europe in the World”. The following table gives the reparation according the space covered: ESPON Euromed World Other Total Volume 1 9 21 58 0 88 Volume 2 2 42 44 0 88 Volume 3 0 11 12 29 52 Total 11 74 114 29 228 E) ESDP policy option 15 policy options have been addressed in the 3.4.1. final report. They can be grouped in 3 thematic fields, development assistance, relations between regional development and external relations and cross border cooperation. Development assistance. - In order to make the development assistance more effective, EU should support the following conditions: (1) Aid must be cost effective with low transaction costs, (2) recipient countries must have primary responsibility for its use, (3) aid must be untied. - In terms of good governance, all aid and development programmes should be enriched with a capacity building element in order to work with local recipient communities in achieving their own Millennium goals.

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- EU should support the setting up of a Marshall plan directed to ESPON’s neighbours, primarily to the south, which would have many advantages for both Europe and its neighbouring countries. - EU should not restrict the neighbourhood issue to a concern over free-trade or immigration control. The countries neighbouring the ESPON area to its East and South should instead be functionally integrated in a global regional programme including labour force and training, investment, energy and environmental issues. Relations between regional development and external relations. - The concept of territorial cohesion elaborated by European Union through the ESDP and actually applied inside the ESPON 29 territory should be reformulated in the wider context of an enlarged space towards both east and south. The spatial structure of heterogeneity (gradient or discontinuity) is not the same in each direction and different strategies thus need to be elaborated, in particular through a new shaping of INTERREG cooperation areas. - Strategies for regional development elaborated inside ESPON territory could be transposed to neighbouring countries, in particular in the border regions. - It is necessary to maintain and develop a regional and sub-regional territorial base for the implementation of the neighbourhood policy, while currently its Action Plans are designed from a purely bilateral perspective (Commission / each neighbour country). As far as the energy issue, the environmental issue or the migration and training issues are concerned, the regional scale is surely the correct one. - The ENP Action Plans should enhance more obviously the local dimension of projects, with a strong commitment of local public and private actors. The EU could more easily monitor the implementation of such projects, and make regular evaluations, using a system similar to the one used in the European regional policy. - Furthermore, questions have arisen as to whether the ENPI will be efficiently handled by the DG Relex. The European Commission should define more clearly the connections between the DG Regio and the DG Relex in order to make the goals of the European regional policy and those of the Neighbourhood policy meet, in the field of regional development. A higher level of coordination is necessary to support the successful implementation of cross border and transnational cooperation, because of strong interactions between what happens

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in the territory of third countries and what happens inside the territory of EU members. - To convince the Russian government to lift the non tariff barriers which still hamper the growth of external trade in that part of the neighbourhood. This would have a positive effect on regions whose economy is still much oriented towards the Russian market. Cross border cooperation. - The new regional arrangements, and in particular, the future European and Neighbourhood Partnership Instrument, must have a significant amount of funds dedicated to cross border cooperation. - EU should make an effort for the training of local authorities on both sides of the border. Local governments usually suffer from a lack of administrative capability for the conception, implementation and financing of joint cross border projects in the frame of Neighbourhood Programs. - EU should determine very clearly the rules of the game about cross border cooperation. It is necessary to define more clearly each part’s task. For instance, Baltic authorities want to negotiate only the contents of the projects with Russia and Russian regions. All the rest must be left to European Commission. - EU should continue the dialog with Russian authorities, at the highest level, in order to conceive genuinely joint projects in the domain of transports. A dialog at the highest level would be a relevant way to by pass the bad relations between Russia and the Baltic States. Such a dialog should exist also with Ukraine, Belarus and Moldova.

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F. Further research issues Four main research issues have been identified that would be very relevant to deepened. More case studies should be launched on neighbourhood countries on cross border and transnational relations. Case studies should cover all the ESPON frontiers and especially the southern ones. Transnational environmental issues between ESPON and neighbours countries; for example Black Sea and Mediterranean Sea should be more taken into account. The comparison between ESPON and comparable macro regions and Global Integration Zones should be developed. More in-depth studies on interactions between ESPON and the rest of the world at different level in Europe should be launched. In the perspective of an ESPON two, it would be relevant to launch different project on “Europe in the World” in one hand and “The world in Europe” in the other one. For the later, as globalisation is mainly linked to urban places, that kind of project should be associated to work on polycentricism and gateway and implies a database on cities. G. Data gap to overcome Before starting a work on the database building it would be very relevant to develop links with other DGs that are implied in the same field, namely DG trade and DG relex. The main data gaps to overcome that have been identified are the following ones:

- Long term databases - Foreign Direct Investments - Migrations flow (especially o the point of view of origin countries) - Environment flows and structure.

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ESPON project 3.4.1.

Europe in the World

Final Report – Vol.2 Integrated tools & thematic studies

Co-financed by the European Community through the Interreg III ESPON Programme

4

5

ESPON project 3.4.1.

Europe in the World

Final Report – Vol.2 Integrated tools & thematic studies

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This report represents the final results of a research project conducted within the framework of the ESPON 2000-2006 programme, partly financed through the INTERREG programme. The partnership behind the ESPON programme consists of the EU Commission and the Member States of the EU25, plus Norway and Switzerland. Each partner is represented in the ESPON Monitoring Committee. This report does not necessarily reflect the opinion of the members of the Monitoring Committee. Information on the ESPON programme and projects can be found on www.espon.lu The web side provides the possibility to download and examine the most recent document produced by finalised and ongoing ESPON projects. ISBN number: This basic report exists only in an electronic version. Word version: © The ESPON Monitoring Committee and the partners of the projects mentioned. Printing, reproduction or quotation is authorized provided the source is acknowledged and a copy is forwarded to the ESPON Coordination Unit in Luxembourg.

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PARTICIPANTS SCIENTIFIC COORDINATION This work was coordinated by Claude Grasland (professor at University Paris 7, UMR Géographie-cités) and Clarisse Didelon (Post Ph’D at University Paris 7, UMS RIATE) CORE TEAM RIATE: Bernard Corminboeuf, Marc Guerrien, Nicolas Lambert, Isabelle Salmon IGEAT: Laurent Aujean, Gilles Van Hammes, Pablo Medina, Christian Vandermotten ITPS: Mats Johansson, Daniel Rauhut LADYSS: Pierre Beckouche, Yann Richard UMR Géographie-cités: Nadine Cattan, Christian Grataloup, Guillaume Lesecq, Christine Zanin EXPERTS CRS HAS: Györgyi Barta, László Dancs, Imre Nagy, Alexandra Szigeti, Péter Strömpl TIGRIS - "Alexandru Ioan Cuza" University: Danel Condachi Octavian Groza, Ionel Muntele, Alexandru Rusu, Oana Stoleriu, Georgiana Voicu ETH Zurich: Marco Keiner GRUPO SOGES: Alberto Vanolo ORMES: Mohamed Charef, M’hamed Wahbi

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TABLE OF CONTENTS 1 INTRODUCTION ..................................................................................... 17 PART A : INTEGRATED TOOL ........................................................................15 2 SCALE, SCALE, SCALE….......................................................................... 19

2.1 Scales and Levels........................................................................ 19 2.2 Geographical Scale (G-Scale)........................................................ 21 2.3 Time Scale (T-Scale) ................................................................... 25 2.4 Political levels (P-levels) and political scale (P-Scale)........................ 30 2.5 Conclusion ................................................................................. 34

3 MAP TEMPLATES AND GRAPHIC HARMONISATION ..............................................39

3.1 Which Cartographic Projection? ..................................................... 40 3.1.1 Template 1 « EU29 »............................................................. 40 3.1.2 Projection 1: The Mercator projection....................................... 41 3.1.3 Projection 2: The Winkel projection ......................................... 42 3.1.4 Template n°2 « World » ......................................................... 42 3.1.5 Template 3 « World 2 » ......................................................... 43 3.1.6 Template 4 « Pan European » ................................................. 46 3.1.7 Template 5: « World and regional MIX ».................................. 46

3.2 Which divisions? ......................................................................... 47 3.2.1 The national level.................................................................. 47 3.2.2 The “regional” level ............................................................... 50

3.3 Which message? ......................................................................... 51 3.4 Map background and countries...................................................... 51

3.4.1 Countries ............................................................................. 52 3.4.2 Countries and regions out of UE29........................................... 52 3.4.3 Legends............................................................................... 52

3.5 Graphic templates....................................................................... 57 4 DATA MINING AND DATABASE BUILDING........................................................59

4.1 Data mining and database building ................................................ 59 4.1.1 Data and Main Sources: ......................................................... 59 4.1.2 Harmonization of datasets...................................................... 65

5 METHODOLOGICAL FRAMEWORK FOR THE ANALYSIS OF FLOWS AND STRUCTURES .......70

5.1 Preliminary sample of methods for flows analysis ............................ 70 5.1.1 Absolute level of flows and hierarchy ....................................... 70 5.1.2 Relative level of flows and influence......................................... 72 5.1.3 Other measures of flows intensity............................................ 73

5.2 Preliminary sample of methods for structure analysis ....................... 74 5.2.1 Size and hierarchy ................................................................ 75 5.2.2 Dissimilarity and identity........................................................ 77 5.2.3 Differences and complementarity ............................................ 81 5.2.4 Spatial proximity: geographical neighbourhood and network accessibility...................................................................................... 81

5.3 Preliminary sample of methods for synthetic analysis ....................... 85 5.3.1 Thematic synthesis................................................................ 85 5.3.2 Structural synthesis............................................................... 88

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5.3.3 Flows synthesis..................................................................... 89 6 DICTIONNAIRE OF CONCEPTS.....................................................................93

6.1 Integration Zones ....................................................................... 93 6.2 Centre / Periphery....................................................................... 94 6.3 Regionalisation ........................................................................... 96 6.4 Polycentrism .............................................................................. 99 6.5 Gateway (cities) ........................................................................101 6.6 Area of influence........................................................................103 6.7 Barrier Effect.............................................................................105 6.8 Neighbourhood ..........................................................................107 6.9 Territorial cooperation/competition ...............................................109 6.10 Territorial Cohesion ....................................................................112 6.11 International Division of Labour ...................................................113 6.12 Territorial / Spatial differentiation.................................................115

PART B : THEMATIC ANALYSIS ...................................................................114 7 DEMOGRAPHIC THEMATIC ANALYSIS........................................................... 118

7.1 Demographic flows towards Europe ..............................................118 7.1.1 A background sketch ............................................................118 7.1.2 Demographic flows towards Europe – a selective process...........119 7.1.3 Migration – the prime driver behind population change..............120 7.1.4 Differing factor endowments and factor mobility .......................121 7.1.5 Implications for Capital Mobility .............................................122 7.1.6 Implications for Labour Mobility..............................................123

8 ECONOMIC THEMATIC ANALYSIS ............................................................... 127

8.1 Structural evolution of population and GDP PPS of World States (1952-1998) 127

8.1.1 Introduction ........................................................................127 8.1.2 Demographic evolution of world states 1952-1998....................128 8.1.3 Economic evolution of world states 1952-1998 .........................137 8.1.4 Synthetic typology of joint demographic and economic evolutions of world states 1952-1998 ....................................................................146 8.1.5 Conclusion: the effect of political enlargement on the economic and demographic dynamic of the european union .......................................152

8.2 Benchmarking of WUTS Regions and Macroregions. ........................154 8.2.1 Benchmarking the World on the WUTS base.............................155 8.2.2 What about ESPON and other economic macroregions...............159

9 ACCESSIBILITY THEMATIC ANALYSIS .......................................................... 163

9.1 Distance proximity to ESPON 29...................................................163 9.1.1 Common borders and maritim neighbourhood with ESPON 29 ....165 9.1.2 Colonial relations as factor of proximity with ESPON 29 .............166 9.1.3 Common language as factor of potential interactions with ESPON 29 168

9.2 Typology of ESPON countries, according to the air and trade flows ....169 9.2.1 Methodology .......................................................................169 9.2.2 The typology of ESPON countries on the trade flows..................170 9.2.3 The typology of ESPON countries on the airflows ......................171 9.2.4 Conclusion ..........................................................................172

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10 ENVIRONMENT THEMATIC ANALYSIS........................................................... 176

10.1 Romania : future eastern EU border environmental Challenges .........176 10.1.1 EU’s border security. ............................................................176 10.1.2 Air quality. ..........................................................................177 10.1.3 Pesticides............................................................................177 10.1.4 Wastes. ..............................................................................178 10.1.5 Radioactive waste. ...............................................................179 10.1.6 Oil. ....................................................................................180 10.1.7 Chemical weapons. ..............................................................181 10.1.8 Rocket fuel..........................................................................181 10.1.9 Nature, forest and biodiversity. ..............................................182 10.1.10 Water..............................................................................183 10.1.11 Land resources. ................................................................185 10.1.12 Black Sea and Sea of Azov. ................................................185 10.1.13 References.......................................................................187

11 EUROPEAN NEIGHBOURHOOD THEMATIC ANALYSIS ......................................... 188

11.1 The Neighbourhoods question in the EIW programme. Triad, Globalisation, Regionalisation ...............................................................188 11.2 The Regional economy. West-East integration, North-South divide ....190

11.2.1 Structures – GDP .................................................................190 11.2.2 Flows - Trade ......................................................................192 11.2.3 Flows – Public aid.................................................................221 11.2.4 Flows - Workers remittances..................................................230 11.2.5 Flows – Tourism...................................................................233 11.2.6 Flows - International migrations.............................................235

11.3 Regional policies ........................................................................243 11.3.1 The ambition of the European Neighbourhood Policy .................243 11.3.2 The shortcomings of the Barcelona process..............................244

12 MENTAL MAP THEMATIC ANALYSIS ............................................................. 248

12.1 Firms, Countries, International Organisations and NGOs’s: World regionalisation......................................................................................... ...............................................................................................248

12.1.1 Introduction ........................................................................248 12.1.2 Methodology .......................................................................249 12.1.3 How we build the data base...................................................249 12.1.4 How we get the results .........................................................258 12.1.5 Results ...............................................................................260

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FIGURES Figure 2-1 : Comparative demographic and economic evolution of countries from

South and East Mediterranean and East Central Europe.......................... 29 Figure 2-2 : A multiscalar Territorial Analysis of Kyoto’s Protocol ................... 37 Figure 2-3 : A global spatial vision of Kyoto’s Protocol .................................. 38 Figure 3-1 : ESPON Space........................................................................ 40 Figure 3-2 : Mercator projection................................................................ 41 Figure 3-3 : Winkel Projection................................................................... 42 Figure 3-4 : World North Pole Azimutal Equidistant projections...................... 43 Figure 3-5 : Template for Flows between Europe and the world ..................... 44 Figure 3-6 : Hammer-Aïtof Template for Flows between Europe and the world. 44 Figure 3-7: Europe Lambert Azimuthal Equal Areas projection ....................... 46 Figure 3-8 : World and regional Template................................................... 46 Figure 3-9 : « WUTS »............................................................................ 48 Figure 3-10 : « ESPON Europe divisions » .................................................. 49 Figure 3-11 : « WORLD divisions » ............................................................ 49 Figure 3-12: « Pan European » divisions. ................................................... 50 Figure 3-13 : Regional delimitations of European ESPON countries ................. 50 Figure 3-14: Map backgrounds.................................................................. 51 Figure 3-15 : legend propositions .............................................................. 53 Figure 3-16: Minimum and maximum values have always to be written clearly. 54 Figure 3-17 : 4 examples of Pan European layout ........................................ 55 Figure 3-18 : 4 examples of world Layout................................................... 56 Figure 3-19 : 2 examples of ESPON layout.................................................. 57 Figure 3-20 : Graphics layout ................................................................... 57 Figure 3-21 : Colours chart ...................................................................... 58 Figure 5-1 : Size as multivariate dimension ................................................ 77 Figure 5-2 : principle component analysis of economic, social and environmental

dimendations ................................................................................... 79 Figure 5-3 : Classification tree .................................................................. 80 Figure 5-4 : Common border between states in pan-European area................ 83 Figure 5-5 : Discontinuities of GNP/inh. between states along terrestrial borders

...................................................................................................... 83 Figure 5-6 : Synthesis of air and trade flows between selected western

Mediterranean countries..................................................................... 92 Figure 7-1 : Permanent migrant flows.......................................................119 Figure 7-2: A schematic view of migration pattern between regions with differing

economic structure according to a traditional push-pull approach and according to an SLM-approach ...........................................................126

Figure 8-1 : Evolution of the share of world population of the European Union

(1950-2020) ...................................................................................153 Figure 8-2 : Evolution of the share of world GDP (ppps) of the European Union

(1950-2020) ...................................................................................153 Figure 8-3 : Evolution of GDP ..................................................................160 Figure 8-4 : Share in the World Gross Product (constant 2000 US$)..............160 Figure 8-5 : Evolution of GDP per capita....................................................161 Figure 8-6 : Annual evolution of GDP per capita (constant 2000 US$)............161

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Figure 8-7 : Evolution of inward FDI stock in various regions........................162 Figure 8-8 : Share in the World FDI inward stock .......................................162 Figure 9-1 : Share of different WUTS in the extra-espon airflows of the groups of

country ..........................................................................................173 Figure 9-2 : Share of different WUTS in the extra-espon trade of the groups of

country ..........................................................................................174 Figure 10-1 : Dynamics of water abstraction from surface and ground water

systems (1992-1998) (1,000,000 m3) ................................................184 Figure 11-1 : GDP (constant 2000 b US$) .................................................192 Figure 11-3 : Goods trade (a) between consolidated EU25 and its neighbours,

2000-04 .........................................................................................196 Figure 11-4 : Share of EU25 and of Russia in the goods trade of the CIS (2003)

.....................................................................................................198 Figure 11-5 : Goods trade (imports + exports), b € ...................................199 Figure 11-6 : EU Exports and imports (billion €) with : ................................200 Figure 11-7 : Goods trade partners of central Europe countries and Turkey,

1993-2001......................................................................................201 Figure 11-8 : Foreign Direct Investment (inflows) % GDP ...........................212 Figure 11-9 : Geography of FDI of ESPON countries in the neighbourhood

Spanish investments in the neighbourhood (flows) ...............................213 Figure 11-10 : Geography of FDI of ESPON countries in the neighbourhood

German investments in the neighbourhood (stock) ...............................214 Figure 11-11 : Geography of FDI of ESPON countries in the neighbourhood.

Dutch investments in the neighbourhood (stock) ..................................215 Figure 11-12 : Dutch FDI stock abroad, by geographical destination (1994-2003)

.....................................................................................................215 Figure 11-13 : Geography of FDI of ESPON countries in the neighbourhood

Swedish investments in the neighbourhood (stock)...............................216 Figure 11-14 : Geography of FDI of ESPON countries in the neighbourhood.

Finish investments in the neighbourhood (stock) ..................................217 Figure 11-15 : Inflows of FDI, breakdown by geographical origin ..................219 Figure 11-16 : Stocks of FDI in and out of Slovenia ....................................220 Figure 11-17 : Tourism flows in the European region ..................................234 Figure 11-18 : Inflows of migrants coming to Germany from the Balkans.......238 Figure 11-19 : Migration flows to and from Russia ......................................239 Figure 11-20 : Migration flow from and to the Russia Federation...................240 Figure 12-1 : Pernod-Ricard division of the World .......................................253 Figure 12-2 : Cadbury-Schweppes division of the World ..............................253 Figure 12-3 : Siemens division of the World...............................................253 Figure 12-4 : One of the Alcatel divisions of the World ...............................254 Figure 12-5 : two different divisions of the World proposed by the United Nations

.....................................................................................................254 Figure 12-6 : The presence list version / map version problem (AXA website).255 Figure 12-7 : The double belonging (Peugeot website) ................................255 Figure 12-8 : hierarchical tree for NGOs ....................................................259

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MAPS Map 8-1 : Share of the world population in 1952 ........................................129 Map 8-2 : Share of the world population in 1998 ........................................130 Map 8-3 : Annual average growth rate of population 1952-1998...................132 Map 8-4 : Difference between share of world population in 1952 and 1998 ....133 Map 8-5 : Typology of demographic evolutions 1952-1998..........................136 Map 8-6 : Share of the world GDP (ppp) in 1952 ........................................138 Map 8-7 : Share of the world GDP (ppp) in 1998 ........................................139 Map 8-8 : Annual average growth rate of GDP 1952-1998 ...........................141 Map 8-9 : Difference between world share of GDP (ppps) in 1952 and 1998 ...142 Map 8-10 : Typology of economic evolution 1952-1998 ...............................145 Map 8-11 : Synthetic typology of demographic and economic evolution (1952-

1998).............................................................................................150 Map 9-1 : Distance score ........................................................................164 Map 9-2 : Contiguity score ......................................................................166 Map 9-3 : Colonial score .........................................................................167 Map 9-4 : linguistic score ........................................................................169 Map 9-5 : typology of European countries on the basis of airflows.................172 Map 9-6 : Typology of European countries based on the trade flows..............174 Map 11-1 : Geography of Turkish goods trade: a strong euromediterranean

feature ...........................................................................................202 Map 11-2 : Exchanges of goods and bilateral intensity of trade of Belarus with

the Euromed region in 2004. .............................................................204 Map 11-3 : Exchanges of goods and bilateral intensity of trade of Russia with the

Euromed region in 2004....................................................................204 Map 11-4 : Exchanges of goods and bilateral intensity of trade of Ukraine with

the Euromed region in 2004. .............................................................205 Map 11-5 : Exchanges of goods and bilateral intensity of trade of Algeria with the

Euromed region in 2004....................................................................205 Map 11-6 : Exchanges of goods and bilateral intensity of trade of Morocco with

the Euromed region in 2004. .............................................................206 Map 11-7 : Exchanges of goods and bilateral intensity of trade of Tunisia with the

Euromed region in 2004....................................................................206 Map 11-8 : Exchanges of goods and bilateral intensity of trade of Egypt with the

Euromed region in 2004....................................................................207 Map 11-9 : Exchanges of goods and bilateral intensity of trade of Jordan with the

Euromed region in 2004....................................................................207 Map 11-10 : Exchanges of goods and bilateral intensity of trade of Lebanon with

the Euromed region in 2004. .............................................................208 Map 11-11 : Exchanges of goods and bilateral intensity of trade of Turkey with

the Euromed region in 2004. .............................................................208 Map 11-12 : Geographical breakdown of European Commission’s official

development assistance from 2001 to 2004. ........................................223 Map 11-13 : Geographical breakdown of EU 15 members’ official development

assistance from 2001 to 2004............................................................223 Map 11-14 : Geographical breakdown of United States’ official development

assistance from 2001 to 2004............................................................224 Map 11-15 : Geographical breakdown of Japan’s official development assistance

from 2001 to 2004. ..........................................................................224

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Map 11-16 : Total net official development assistance to the EU neighbourhood from 2001 to 2004. ..........................................................................227

Map 11-17 : Net official development assistance per inhabitant in the EU neighbourhood from 2001 to 2004. ....................................................227

Map 11-18 : Net official development assistance to the EU neighbourhood and share of the EU (Commission + EU 15 members) from 1991 to 1995. .....229

Map 11-19 : Net official development assistance to the EU neighbourhood and share of the EU (Commission + EU 15 members) from 1996 to 2000. .....229

Map 11-20 : Net official development assistance to the EU neighbourhood and share of the EU (Commission + EU 15 members) from 2001 to 2004. .....229

Map 11-21 : Official development assistance to the EU neighbourhood and share of the USA from 2001 to 2004. ..........................................................230

Map 11-22 : Official development assistance to the EU neighbourhood and share of the Arab countries and Arab agencies from 2001 to 2004...................230

Map 12-1 : French firms dividing the World ...............................................262 Map 12-2 : German firms dividing the World..............................................262 Map 12-3 : British firms dividing the World ................................................262 Map 12-4 : Countries dividing the World....................................................264 Map 12-5 : International Organisations dividing the World ...........................265 Map 12-6 : the limits of zones by International Organisation ........................265 Map 12-7 : NGOs dividing the World in 5 regions........................................268 Map 12-8 : NGOs dividing the World in 8 regions........................................268 Map 12-9 : example of Chinese World map................................................269 Map 12-10 : Division of the World according to the World Bank - Geographical

discount .........................................................................................272 Map 12-11 : Division of the World according to the World Bank - Geographical

areas .............................................................................................272 Map 12-12 : Division of the World according to the Food & Agricultural

Organisation – Development, sub-level ...............................................273 Map 12-13 : Division of the World according to the United Nation Population

Division. Regions, general level & Development, sub-level. ....................274 Map 12-14 : smallest common denominator of regions................................275

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TABLES Table 2-1 : Basic information on selected territorial units in 1999 .................. 20 Table 2-2 : Example of G-Scale transformation ........................................... 23 Table 2-3 : Economic and demographic trends in SE Mediterranean and East

Central Europe according to various time-scales .................................... 27 Table 2-4 : Definition of political levels....................................................... 30 Table 2-5 : Draft version of political scales ................................................. 31 Table 4-1 : countries for Europe in the World ............................................ 67 Table 4-2 : Euromed list of countries ........................................................ 68 Table 4-3 : ESPON list of countries ........................................................... 69 Table 5-1 : Mean annual value of trade flows 1996-2000 (millions of US $) .... 70 Table 5-2 : Structural characteristics of selected Mediterranean countries (1999)

...................................................................................................... 75 Table 5-3 : Size as proportion of the whole system..................................... 76 Table 5-4 : Size as rank of elementary spatial units .................................... 76 Table 5-5 : Selected demographic, economic and environmental characteristic

ratios .............................................................................................. 78 Table 5-6 : Dissimilarity matrix ................................................................ 80 Table 5-7 : Observed trade flows ............................................................. 87 Table 5-8 : Expected trade flows .............................................................. 87 Table 5-9 : Absolute residuals (Fij – F*ij) .................................................. 87 Table 5-10 : Relative residuals (Fij/F*ij).................................................... 87 Table 5-11 : Relation between economic development (GNP/inh.) and belonging

to EU. ............................................................................................. 89 Table 5-12 : Relation between Ecological efficiency (CO2/GNP) and belonging to

EU. ................................................................................................. 89 Table 5-13 : Synthesis of three types of flows between Mediterranean countries

...................................................................................................... 91 Table 8-1 : Distribution of GDP ...............................................................156 Table 8-2 : Distribution of GDP (in percentage of the world total). Average

annual percentage distributed in periods of five years ...........................158 Table 11-1 : The three territorial paths of the world economy ......................189 Table 11-2 : The index of regionalisation...................................................190 Table 11-3 : GDP per inhab. (PPP, constant 2000 US$) ...............................191 Table 11-4 : Consolidated EU15’s trade of goods (%).................................194 Table 11-5 : Spanish FDI flows abroad, by geographical destination (1999-2004)

.....................................................................................................213 Table 11-6 : German FDI stock abroad, by geographical destination (1994-2003)

.....................................................................................................214 Table 11-7 : Swedish FDI stock abroad, by geographical destination (1994-2003)

.....................................................................................................216 Table 11-8 : Finish FDI stock abroad, by geographical destination (1994-2002)

.....................................................................................................217 Table 11-9 : The official development assistance disbursed by the main donors in

the world (2002-03, Million constant US dollar, 2003 prices) ..................222 Table 11-10 : Workers’ remittances (current $), in % of the GDP.................232 Table 11-11 : Destination (Germans, Spanish) and origin (Egypt) of tourists, %

.....................................................................................................233 Table 11-12 : Evolution of population in CIS neighbours ..............................238 Table 11-13 : France, main inflows of foreign population by nationality

(thousands) ....................................................................................242

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Table 11-14 : Portugal, major origins of foreign population (stock) by nationality (thousands) ....................................................................................242

Table 11-15 : EU’s subsidies to the CEEC and the Mediterranean partners Annual average, 1995-2004.........................................................................246

Table 12-1 : list of NGOs.........................................................................251 Table 12-2 : first step of building the matrix. To which zone belongs a country?

.....................................................................................................257 Table 12-3 : second step of building the matrix. For each questionnaires a matrix

has been built .................................................................................257 Table 12-4 : third step of building the matrix. Sum of all individual matrixes .257 Table 12-5 : number of regions................................................................261 Table 12-6 : composition of regions formed by the most significant partition ..266

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1 INTRODUCTION The first part of this second volume of the final report of the ESPON project 3.4.1. Europe in the World is dedicated to the presentation of the methods used by the project partners and the tools they produce (new map templates, world databases…) to achieve it. It first focus on what it is at stake when one introduce the World as a new dimension in European spatial studies especially concerning the necessity to broaden the time scale. The enlargement of space and time focuses induces technical adaptations that are described in the chapters about map templates and database building. The methodological framework for the analysis of structures and flows are then shortly presented. This part finally contain dictionary of concepts that detail the main concepts used in this project. The second part of the volume proposes the thematic analysis that did not find their way to the first volume, because they are very much detailed, too much for the synthetic presentations of the first volume. Those analyses are grouped according the main packages that organised the second work package of the project: demography, economy, accessibility, environment, neighbourhood, mental maps…

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PART A

INTEGRATED TOOLS

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2 SCALE, SCALE, SCALE…

On se croit naturellement bien plus capable d'arriver au centre des choses que d'embrasser leur circonférence. L'étendue visible du monde nous surpasse visiblement ; mais comme c'est nous qui surpassons les petites choses, nous nous croyons plus capables de les posséder ; et cependant il ne faut pas moins de capacité pour aller jusqu'au néant que jusqu'au tout. […] Connaissons donc notre portée: nous sommes quelque chose et ne sommes pas tout. Ce que nous avons d'être nous dérobe la connaissance des premiers principes qui naissent du néant, et le peu que nous avons d'être nous cache la vue de l'infini. B. Pascal (1671), Les Pensées, art. XVII, Connaissance générale de l’homme

System analysis offers a good theoretical framework for the analysis of the situation of Europe in the World but this general method has to be adapted to the specific problems of an analysis which has to focus on the territorial dimension of political action. The introduction of a fourth dimension in European Spatial Planning has many consequences which can be classified into four interrelated problems: geographical dimension, time dimension, thematic dimension and political dimension. This notion of “dimension” is indeed not very clear and can easily be confused with the systemic concepts of “sub-system” or “hierarchical level” which has been defined in previous section. To clarify the problem, we propose to introduce the concept of “scale” which is easier to formalise from mathematical point of view.

2.1 Scales and Levels

The geographical dimension is firstly analysed because it offers a clear and useful distinction between the notions of spatial scale and territorial levels. To illustrate this point, we have established a table which displays selected geographical, demographic and economic characteristics of heterogeneous territorial units (table 2-1).

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Table 2-1 : Basic information on selected territorial units in 1999

TERRITORIAL UNITS Political AREA Pop. 1999 GDP 1999 Level km2 x. 1000 x. Mio. $ ppsWORLD Global 133 828 960 5 976 504 24 987 088 NAFTA Supranational 21 557 900 409 059 8 994 767 Canada National 9 970 610 30 957 664 021 Mexico National 1 958 200 98 807 679 523 USA National 9 629 090 279 295 7 651 223 UE15 Supranational 3 339 370 378 029 6 897 641 Germany National 357 030 82 075 1 483 607 Netherlands National 41 530 15 800 331 670 Greece National 131 960 10 579 122 405 Luxembourg National 3 000 433 14 595 Malta National 300 390 4 356 France National 647 300 60 825 1 196 613 Western France Infranational 86 987 7 854 130 801 Bretagne Infranational 27 811 2 937 48 526 Finistère Infranational 6 882 860 14 773 Ile de France Infranational 12 279 11 060 337 434 Hauts de Seine Infranational 179 1 445 65 240 Paris Local authority 108 2 144 120 643 Source: WDI, Eurostat, Maddisson database.

If we examine this table from political point of view, we can notice that territorial units belong to at least five different categories which are associated to different levels of analysis.

Global level (0) is represented by a single territorial unit which is the world as a whole.

Supranational level (1) is represented here by NAFTA and UE15 which are world regions based on group of states associated by treaties.

National level (2) is represented by various states (Canada, Mexico, Germany, Malta…) which are very different in size but display the same characteristics of political autonomy, existence of independent statistical system, etc.

Infranational level (3) is represented by the various levels of administrative division of states according to national or supranational criteria. For example, France has official territorial divisions with partial autonomy and political representation (regions, departments, communes), but also technical divisions related to supranational organisation of European Union (definition of NUTS1 regions called ZEAT).

Local level (4) is represented by Paris which is at the same time a regional division (from level NUTS 3) and a local authority (from level NUTS 5) defined as smallest level of administrative organisation or political representation.

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If we examine the table from the thematic point of view, we can consider that the comparison of territorial units of the same political level is not necessarily relevant and that, in many cases, empirical comparison would be more relevant through a combination of territorial units of different political levels because the scales of territorial units are completely different.

From a geographical point of view, does it really make sense to compare two states like Malta (300 km2) and Canada (9 970 610 km2) or two NUTS 3 regions like Hauts-de-Seine (179 km2) and Finistère (6882 km2)?

From a demographic point of view, is it relevant to compare Luxembourg (0.4 millions of inhabitant) to Germany (82.1 millions of inhabitant) or is it better to decide – as done by Eurostat - that Luxembourg can also be described as a NUTS3 region which can be more easily compared to Finistère (0.9 millions of inhabitant) or Hauts-de-Seine (1.4 millions of inhabitants)?

From an economic point of view, is it interesting to compare the Netherlands (332 billions of $ pps) to a small Mediterranean island like Malta (4 billions of $ pps) or a continental economy like United States of America (7651 billions of $ pps) and isn’t it more interesting to establish comparison with another metropolitan area of comparable size like Ile-de-France (337 billions of $ pps), despite the fact that it does not belong to the same political level?

The answer to such questions is not obvious because, according to the target of the analysis, we can either decide to focus on political criteria or thematic criteria when we select the basic territorial units which will be the basis of the analysis. A thematic harmonisation of the territorial units presents many advantages for the description of spatial trends and helps to avoid many traps in the interpretation of results. But at the same time, the introduction of heterogeneous political levels makes the elaboration of policy recommendations more difficult because territorial units of different political levels have not the same degree of autonomy in political action.

2.2 Geographical Scale (G-Scale)

The proper solution to the previous problem is not to oppose the political approach (levels) and the thematic approach (scales), but to find a coherent and clear way for their combination in the framework of ESPON project “Europe in the World”. One important milestone for an objective approach is the concept of G-Scale proposed by Hagget (1965). When he introduced the concept of G-Scale, the initial idea of P. Haggett was to find an homogeneous mathematical solution

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for the measure of surfaces which was expressed in different statistical units (spare kilometres, square miles, acres, hectares…). Therefore, the purpose of G-scale was to establish a universal measure of “Geographical scale” based on the decimal logarithm of the area of the Earth’s surface divided by the area of the target portion of space according to equation (1) G (AREAi) = log10 ( AREAEarth/ AREAi) (1) As an application of initial Hagget’s proposal, we can try to evaluate the G-Scales value of the area covered by NAFTA (21.6 millions of km2). As the total area of the earth is approximately equal to 510.1 millions of km2 (including both land and oceans), NAFTA represents 21.6/510.1= 4.22% of earth surface which correspond to G=1.37. In the case of Mexico (1.96 millions of km2), the share of earth surface is only 0.38% which corresponds to G=2.41. At first glance, these figures seem rather abstract, especially because of logarithmic transformation, but they offer very interesting properties:

The G-scale is based on a natural referential (the whole Earth surface) which is equal to the reference value G= 0

The interpretation of the values of G is very easy if we notice that they are related to the power of 10: G=1 represents 10%, G=2 represents 1%, G=3 represents 0.1 %, etc…

The change of a referential to another one is obtained by simple difference of the value of G. For example, if we want to compare the area of Mexico’s to the referential of NAFTA, we just have to subtract their respective G-values: 2.47-1.31 = 1.13 which indicates immediately that the area of Mexico is more or less equal to 10% of the area of NAFTA.

Of course, we can also address some criticism to Haggett’s initial proposal and propose some adaptation. For example, we can estimate that the good referential for the estimation of the surface of NAFTA is not the whole area of the Earth but only the land area (148.8 billions of km2) without oceans (361.3 millions of km2). In this case, NAFTA represents 14.5% of the land areas and obtains a better score with G= 0.84. We could also develop a more political approach and decide to exclude Antarctica from the definition of land area, because it is a common property of mankind and not the property of a given sovereign states. In this case, the “political area” of the World is reduced to 133.8 millions of km2, from which NAFTA represents 16.1% with a value G=0.79. The reader has probably noticed that in the last proposed measure of the scale of NAFTA, we have replaced the term “Earth” by the term “World”. Indeed, the term “Earth” is related to the natural subsystem of Universe which is our Blue

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Planet whereas “World” is related to the global system of mankind which, as far as we know, is not included actually in a social system of upper level. This crucial distinction between Earth (natural system) and World (social system) leads us to propose another version of Hagget’s scale which will keep the initial name of G-Scale but with another meaning where G will be the abbreviation of “Global” and not “Geographical”. This new version of Hagget’s scale can now be applied to any kind of phenomena distributed across the world, not only area but also population, wealth, water resources, carbon dioxide emission, etc… Each phenomena which is defined as a raw count variable (X) can indeed be measured on the Global scale of the World according to equation (2): GWorld (Xi) = log10 ( XWorld/ Xi) (2) As an example, we have transformed all initial information of table 2-1 into their equivalent on the Global Scale of the World (table 2-2).

Table 2-2 : Example of G-Scale transformation

% World G-scale TERRITORIAL UNITS AREA POP GDP AREA POP GDP WORLD 100% 100% 100% 0 0 0 NAFTA 16.11% 6.84% 36.00% 0.79 1.16 0.44 Canada 7.45% 0.52% 2.66% 1.13 2.29 1.58 Mexico 1.46% 1.65% 2.72% 1.83 1.78 1.57 USA 7.20% 4.67% 30.62% 1.14 1.33 0.51 UE15 2.50% 6.33% 27.60% 1.60 1.20 0.56 Germany 0.27% 1.37% 5.94% 2.57 1.86 1.23 Netherlands 0.03% 0.26% 1.33% 3.51 2.58 1.88 Greece 0.10% 0.18% 0.49% 3.01 2.75 2.31 Luxembourg 0.00% 0.01% 0.06% 4.65 4.14 3.23 Cyprus 0.00% 0.01% 0.02% 5.65 4.19 3.76 France 0.48% 1.02% 4.79% 2.32 1.99 1.32 Western France 0.06% 0.13% 0.52% 3.19 2.88 2.28 Bretagne 0.02% 0.05% 0.19% 3.68 3.31 2.71 Finistère 0.01% 0.01% 0.06% 4.29 3.84 3.23 Ile de France 0.01% 0.19% 1.35% 4.04 2.73 1.87 Hauts de Seine 0.00% 0.04% 0.48% 6.09 3.45 2.32 Paris 0.00% 0.02% 0.26% 5.87 3.62 2.58

The comparison of table 2-1 and table 2-2 proves that the transformation of initial information into standardised value (share of the world and Global World Scale) presents many advantages for the analysis to be developed in the project Europe in the World:

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Immediate evaluation of the size of territorial units at the world scale: with table 2-1, it was not easy to define the size of a territorial unit at the world scale and the reader was obliged to make really complicated arithmetic operations to perform this evaluation. For example, the demographic size of Netherlands (15.8 millions of inhabitants) had to be compared to the world population (6 billions of inhabitant) when the results is immediately obtained in Table 2-2 (0.26 % of world population, G=2.58).

Immediate comparison of the size of a territorial units for different criteria: with table 2-1, it was not easy to compare the geographic, demographic and economic size of territorial units at the world scale, because they were measured in different units (km2, inhabitants, $ pps) and the total sum of the World was not the same. With table 2-2, we can see immediately that the size of France dramatically varies according to the criteria and is the most important for economy (4.8% / G=1.32), then demography (1.02% / G=1.99), then geographical area (0.48% / G=2.32).

Immediate building of objective typologies for size criteria: due to the standardisation of criteria and the proprieties of logarithmic scale, it is very easy to build typologies according to size criteria when using G-Scale. We can for example consider as “Very Large” the units situated between 10% and 100% of the World (G comprise between 0 and 1), as “Large” the units between 1% and 10 % of the World (G comprise between 1 and 2), as “Medium” the units between 0.1% and 1% of the World (G comprise between 2 and 3), as “Small” the units between 0.01% and 0.1% of the World (G comprise between 3 and 4) and finally as “Very small” the units under 0.01% of the world (G lower than 4) and can be neglected in the analysis as their contribution to the result is less than 1/10 000e of the target phenomena. The fact that the size of a unit is decreasing when the value of G increase appears at first glance something difficult for the reader. But we can notice that the form of scale is in fact consistent with the notion of “level” which has been presented in previous section. G scale is also consistent with natural language when we say, for example, that from a demographic point of view USA is a state of “first level” (G≈1), France “second level” state (G≈2) and Greece a “third level” state (G≈3).

Easy transformation of scale according to a hierarchy of levels: As noticed previously about initial formulation of Haggett’s scale, it is easy to change the referential of any measure based on G-scale by simple computation of arithmetic differences between the G-scale of a territorial and the G-scale of any territorial unit of upper level. For example, the demographic size of Paris is “Small” at the world scale (GWorld= 3.62), but “Medium” at the EU15 scale (GEU15 = 3.62-1.20 = 2.42), “Large” at the national scale (GFrance = 3.62-1.99 = 1.63) and “Very Large” at the regional scale (GIle de France= 3.62 – 2.73 = 0.89).

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Easy computation of standardised ratio and distribution indexes: Last but not least, the normalisation of raw count variables according to the world total makes very easy the computation of all derived ratio and all related indexes of unequal economic allocation of resources to population or unequal geographic distribution of population. For example, the fact that USA represents 4.7% of world population and 30.6% of world GDP (pps) indicates immediately that their GDP (pps) per inhabitant is equal to (30.6/4.7) = 6.6 times higher than the average value of GDP/inh of the world. We can also immediately deduce that their population density is a bit lower than world population density because the ratio of their share of population and area is equal to (4.6/7.2) = 0.65.

Opportunity to distribute statistical results with limited copyright problems?: The fact that we do not use initial raw count variables or ratio but share of world population and standardised index could be an opportunity to distribute the results of ESPON project “Europe in the World” without being obliged to face a huge number of copyright. It is a point to check from a legal point of view, but if the transformation or raw count variables into share of the world and G-scale can be considered as an intellectual added value, ESPON can probably be allowed to distribute more easily related tables and maps1.

2.3 Time Scale (T-Scale)

The previous proposals on geographical scale of analysis of phenomena (G-Scale) is not independent from another discussion related to the choice of time scale (T-Scale) to be chosen in the analysis about the situation of Europe in the World. The link between space and time scales is related to the general empirical rule according to which systems of large size offers a higher level of stability through time than systems of smaller size. There are of course many exceptions to this heuristic observation but it remains generally true and suggests that the analysis of spatial trends at the world scale should necessary be based on longer time periods than other analysis realised at regional scale in the framework of the ESPON program. Another argument in favour of the use of longer time scales in the framework of project ESPON 3.4.1 is the fact that it is easier to obtain long term time-series

1 G-Scale transformation can be considered as a very basic system of cryptography. For example, the G-scale value of the population of USA in 1999 (1.16) is the encrypted value of the real figure of population (279.3 millions of inhabitant) through the application of the cryptographic formula G(X) = log10 (Key/X) , where the key of the code is the total population of the world in 1999 (5976.5 millions of inhabitants). Without this key value, it is not possible to obtain the real figure which was in the initial database. The legal problem is to evaluate if the cryptographic system is sufficient to protect initial information and if the added value of the G-scale transformation is sufficient to consider that it is an intellectual creation.

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when basic territorial units are states than when it is NUTS2 or NUTS3 regions. During the last lead partner meeting of the ESPON project (March 2005), the panel group on ESPON core indicators noticed that only 4 indicators on an amount of 110 was dynamics, 2 of them related to past trends and 2 others to estimated future trends. This strong limitation of dynamic indicators is obviously related to the difficulty to elaborate complete statistical databases at NUTS2 or NUTS 3 levels for the 29 different states of the ESPON project and also to the many changes of administrative territorial divisions which took place in Europe during the period 1989-1995 (see. SIR of ESPON Project 3.2 on long term database). But it is a crucial problem for a spatial planning program like ESPON which can not elaborate long or mid-term scenarios without information on past trends. Even if the spatial resolution is lower, the database elaborated by the ESPON project 3.4.1 should enlarge the time focus to longer period in past (1960-2000) and future (2000-2030) in order to provide this information to other ESPON TPG, especially project 3.2 which has to elaborate a long term database for the quantitative evolution of political scenarios. The time series elaborated at the state level by ESPON 3.4.1 will indeed be transformed into regional estimations according to various procedures of desegregation. But in the case of other projects like ESPON 3.3. Lisbon Strategy, the time series elaborated at state level by ESPON 3.4.1 can also contribute to the development of a historical perspective of benchmarking of economic growth and competitiveness between Europe and other parts of the World. The introduction of a historical perspective for the analysis of the situation of Europe in the World is something which can dramatically modify the approach of European Spatial Planning because it implies a multiscalar evolution of trends not only in space but also in time. To illustrate this notion of time scale, we propose, as we have done for G-Scale, to analyse an empirical example which is the comparison of economic and demographic trends in southern and eastern neighbourhood of Europe (figure 2-1 & table 2-3)

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Table 2-3 : Economic and demographic trends in SE Mediterranean and East Central Europe according to various time-scales

South and East Mediterranea East Central Europe T-scale

Pop GDP Pop GDP 0 Very Short 1999/2000 1.8% 5.1% -0.2% 4.4% 1 Short 1993*/1998* 2.0% 4.2% -0.3% -0.2% 2 Medium 1988*/1998* 2.2% 3.8% 0.0% -3.0% 3 Long 1978*/1998* 2.4% 3.9% 0.2% -0.9% 4 Very Long 1958*/1998* 2.5% 4.9% 0.6% 1.7%

(*) indicate five year mean. For example, 1993* is the mean value of the period 1991-1995 Source: Maddisson database. The aim of this example is not to discuss the interest of a benchmarking between eastern and southern part of the western European neighbourhood but to introduce the interest of a multiscalar analysis of trends in time and to propose simple rules for the definition of T-scale in future research of project developed by ESPON project “Europe in the World”.

Very short term evolution (T-scale=0) will be defined as all trends which are based on a time span lower than 5 years. Between 1999 and 2000 the countries of East Central Europe (ECO) have a rate of economic growth which is very high and approximately equivalent to that of countries of South and East Mediterranea (SEM). But this information is of low interest because it is based on the evolution of a single year.

Short term evolution (T-Scale=1) is related to evolutions observed on a period of 5 years 2 which can be considered as the minimum period of time for the observation of significant trends at world scale. According to this criteria, we can say that countries from SEM have experimented positive trends from a demographic (+2.0 %/year) and economic point of view (+4.0%/year) over the recent period, when countries from ECO were characterised by slightly negative rates on both criteria (-0.3% and -0.2% / year

Medium term evolution (T-scale=2) is related to evolution on a period of 10-15 years. They are related to more structural evolution and, in the case of ECO, this time scale characterises typically the evolution since the fall of the iron curtain in 1989. The change of T-Scale has little effect on the measure of trends in SEM countries but produce an important change in the appreciation of economic trends in East Central Europe which appears

2 Which means not only the evolution between two different years separated by 5 years (1995/2000) but

the evolution between two period of five years (1991-1995 and 1996-2000) for which we have computed the average value before calculating the mean (average?) rate of evolution (1993*/1998*). We could also use a regression model of linear (X=a.t+b) or exponential (logX=exp(a.t+b)) form for the estimation of trends at various time-scales.

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very negative (-3.0%) when they were just slightly negative in a short term (-0.2%) and highly positive (+4.4%) in a very short term.

Long term evolution (T-Scale=3) is related to evolution on a period of 20-25 years, which begins to be mainly related to structural factors but can be influenced by cyclic factors. At this scale of time, the situation of countries from ECO is not as negative as previously, at least from a demographic point of view (+0.2%/year).

Very long term evolution (T-Scale=4) is related to evolutions observed on a period of 40-50 years which is in fact very short from a historical point of view but can be considered as the maximum time for most political decisions. In our example, it is clear that the economic and demographic growth of SEM countries has been much higher than that of ECO countries during the last 50 years. In 1950, the population and economic size of SEM countries was 50% of the size of ECO countries, but they have become equal for both criteria at the beginning of the 1990’s and we can suppose that the situation will be reversed around 2020-2030.

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Figure 2-1 : Comparative demographic and economic evolution of countries from South and East Mediterranean and East Central Europe

(a) Population 1950-2000

0

50

100

150

200

250

1950 1960 1970 1980 1990 2000

Mill

ions

of i

nhab

itant

s

South and East Mediterranea East Central Europe

(b) GDP (pps) 1950-2000

0

300

600

900

1200

1500

1950 1960 1970 1980 1990 2000

Bill

ions

of $

(pps

)

South and East Mediterranea East Central Europe

Source: Maddisson database

East Central Europe: Albania, Armenia, Azerbaijan, Bulgaria, Bosnia, Belarus, Czech Republic, Estonia, Georgia, Croatia, Hungary, Lithuania, Moldova, Macedonia, Poland, Romania, Serbia/Montenegro, Slovakia, Slovenia, Ukraine. South and East Mediterranean Sea: Cyprus, Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Latvia, Malta, Syria, Tunisia, Turkey, Morocco, West Bank &Gaza stripe.

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2.4 Political levels (P-levels) and political scale (P-Scale)

The previous technical discussion on G-Scale and T-Scale was necessary to define the ground basis of political scales (P-scale) to be used in the framework of project Europe in the World for the elaboration of the 4th dimension of political action. As explained in the beginning of this section, we have to face a difficult problem of definition in order to distinguish between political levels and political scales. Political levels can be defined as a hierarchy of systems and subsystems with alternative clear and unclear territorial definitions (table 2-4).

Table 2-4 : Definition of political levels

Political LEVELS

basic TERRITORIAL units Examples SPATIAL

definition

0 World World Clear (at least for land areas but not necessary for oceans)

1 World regions NAFTA, Western Europe, EU25, ESPON29, Asia, …

Unclear (cross-cuting divisions according to criteria)

2 States USA, Germany, Liechtenstein, Southern Korea, ...

Clear (with some exceptions like Western Sahara, Tai-Wan )

3 Administrative regions & Metropolitan areas

Bayern, Arkansas, Basel-Stadt, Wallonia, Greater London, ...

Unclear (because various possible levels of administrative divisions)

4 Local authority London, Ixelles, Paris, Sucy-en Brie,…

Rather Clear (when defined on an administrative basis )

5 Local neighbourhood Paris XIIIe, Manhattan, Ramblas, Mala Strana , ...

Unclear (not necessary based on fixed administrative division, )

The clearest definitions are related to political levels 0, 2 and 4. The level of the World (0) is the global level of political organisation of mankind considered as a whole. Local authority (4) can be defined in a symmetric way as the first level of political organisation. State level (2) is the central level of political organisation which defines the system of international relation. But between each of this relatively clear levels of political organisation, we can find an intermediate system (1,3,5) which has gained growing importance over the last twenty years but without clear definition in most cases. In the case of world regions (1), the problem relies on the great variety of criteria that can be employed for the divisions of regions (juridical, economical, demographical, mental maps, flows, …), producing cross-cutting divisions of the world without clear solutions for the definition of a “best partition” (see Key Question 1). In the case of administrative regions (4), the problem is not related to the fact that administrative division are fuzzy but to the fact that there is a great number of regional divisions in each state according to geographical scale and to functional criteria. The

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administrative division of each state are the result of national culture and history, which means that they are generally not comparable from one state to another (Cf. the MAUP problem for NUTS2/NUTS3 divisions in Europe). Another problem is related to the fact that towns which are major functional realities generally do not fit perfectly to administrative units. In the case of local neighbourhood (5) the problem is related to the fact that social groups have various representations, various mental maps of the place where they live which can not necessary be taken into account by local administrative authorities. But at the same time, these local neighbourhoods (“my street”, “mon quartier”) are perceived as a major reality by citizens and are often the crucial level of democratic organisation of society. The notion of political scale is different from the notion of political level because political scale is not based on the political definition of territorial units but on their functional capacity to influence the evolution of the rest of the World. The political level can contribute to the definition of the political scale (e.g. an increase political integration of European Union can increase its capacity of action at world scale) but the notions are fundamentally different. The definition of political scale (P-Scale) is clearly related to the previous defined geographical scale and time scale, which can be illustrated by a draft version of political scales presented in table 2-5.

Table 2-5 : Draft version of political scales

Political scale Power level Exemple G-scale T-scale 0 Global USA (?) 0.5< > 4 1 Macro-regional EU25, Japan-China 0.5 to 1 > 3 2 Regional Russia, India 1 to 1.5 > 2 3 Micro-regional Sweden, Benelux > 1.5 variable

As a very preliminary proposal, we propose to distinguish between 4 different levels of political scale, which are presented here in a general way but should be adapted to different criteria (economic, demographic, environmental, social, cultural …) with different results in terms of classification of territorial units.

Global political scale (0) characterises states or international organisation which have the power to influence the evolution of the rest of the World and which are subject to no limitations in their political decisions. This situation implies a situation of global domination (G-Scale) for a set of criteria which corresponds to an important share of world resources for these criteria. In practical terms, a share of 30% of the world resources (G<0.5) is generally sufficient if any other potential challenger has a share of resource greater than 10-15%. This situation is actually typically observed for the United States for a great number of criteria (economy,

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military power, cultural influence …). From the point of view of time, the global domination implies the development of long term strategies on at least half a century (T-scale > 4) both for the establishment of the global power and for its reproduction in the future. Once more, the situation of the United States is typical with very powerful think-thanks (private or public) which provide analysis, visions and scenarios for the realisation of long term objectives.

Macroregional political scale (1) characterises states or international organisations which can influence the evolution of the rest of the world but at a less degree than before and with a higher level of dependency to the evolutions observed in the rest of the world. In territorial terms, this situation is generally associated to a dominant influence on a limited part of the world and a less important capacity of actions in the rest of the world. European Union on the one hand, China and Japan on the other hands are typically representative of this category of political scale. But with the important difference that European Union is an emerging political level when China and Japan are rather engaged in a competition for political and economic domination in eastern Asia. In both cases, the G-Scale is comprised between 0.5 and 1.0, which means that these entities account for 10 to 30% of world share on several criteria. In terms of T-Scale, the strategies developed by these entities are generally shorter 20-25 years but are based on important administrative bodies (European Commission, Japan minister of industry and economy …) linked with research institutes and expert groups.

Regional political scale (2) corresponds to a lower level of states or international organisations which is submitted to world trends and has a limited influence on them or only for certain criteria or functions. Their territorial influence is generally limited to the states with which they have common border but which can represent an important part of the world in geographic or demographic terms. Good examples of this situation are provided by India, Russia and Brazil, but with very different situations according to the nature of their relations with neighbouring states (conflict, common history, economic treaties …). Once more, the political scale defines potentialities which are more or less used and can be negatively or positively influenced by the evolution of political levels. The G-Scale of regional political construction is limited from 3 to 10% of the world share and the associated T-Scale is limited to evolutions which are generally not planned or predictable on time periods greater than 10 years.

Micro-regional political scale (3) can be applied to the case of states or international organisations of large to medium size but which benefit from the lack of powerful challengers in their immediate neighbourhood, which offers them a local area of influence. The regional influences of Sweden in

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the Baltic Sea, or Vietnam in former colonial region of Indochina, are good examples of such situation. In both cases, the micro-regional area of political influence is included in a wider political area at regional or macro-regional scale which indicates that they can be analysed as sub-systems more or less integrated to systems of upper level. The G-Scale of such micro-regional political organisation can be very different but does not represent generally more than 3% of world share. In terms of T-scale, the situation is not simple because such micro-regional construction can be very solid and based on long term period of historical existence. The fact that micro-regional scale is based on relations between a limited number of states can make easier a strong integration, as in the case of Benelux which still exists as an important political reality inside the European Union. We can assume that a good knowledge of the micro-regional political scale is a crucial topic for the understanding of political constructions of upper level to which they provide elementary bricks.

The definition of a political scale is a useful tool for the analysis of the situation of Europe in the World and for the analysis of the consequences of globalisation on the development of the European territory. But we have to be aware that this very hierarchical approach of international relations (mainly based on the geopolitical concept of power) is not always relevant and that many other aspects of globalisation are based on transnational flows and networks which can not be captured by these classical concepts. For example, transnational firms developed territorial strategies which are not necessary the same than those of states or international political organisations to which they belong originally and in many cases it is difficult to define their nationality. The economic size of biggest world firms can be equivalent to the size of states of medium and large size (G-Scale between 2 and 3) but their strategies are often developed on shorter periods of time (T-scale lower than 2) and they can introduce a very high level of uncertainty in spatial planning. The same is true for World Cities like New-York, London or Tokyo which are parts of a global network of communication which is partly independent from the political territorial division of the world and can not be analysed through the classical geopolitical grid of levels of power. World is definitively complicated …

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2.5 Conclusion

Is this the Region, this the Soil, the Clime, Said then the lost Arch Angel, this the seat That we must change for Heav’n […] Hail horrours, hail Infernal world, and thou profoundest Hell Receive thy new Possessor: One who brings A mind not to be chang’d by Place and Time J. Milton (1674), Paradise Lost, I, 242-254

Some reader of these pages has probably been disappointed by the huge number of theoretical and methodological considerations which has been introduced as preliminary to the research. But the clarification of concepts and tools is, in the author’s opinion, the necessary condition for the development of good empirical results related to relevant policy recommendations. The introduction of a fourth dimension in the actual practice of European Spatial Planners is not a trivial question and it is necessary to obtain a good agreement on concepts and methods, from both scientific and political points of view, before to develop intensive research on the subject. The time which is apparently wasted on theoretical boring consideration can be in fact a gain for future research in a longer term perspective like the one of ESPON II (T-Scale > 1 ….). As a form of apologize to the reader which accepted to follow the authors in this difficult introduction to the project, we propose a simple political application which, we hope, demonstrates the interest of the way we propose to follow in future development of project 3.4.1. We have chosen for this the example of the application of Kyoto’s protocol on the reduction of carbon dioxide emission. The classical approach of the problem is the international approach which is based on the negotiation between independent states which agree or disagree to sign the protocol of Kyoto, with a minimum number of states requested for the application of the international treaty. As we can see on figure 2-2 it is possible and interesting to transpose at world scale the multiscalar territorial approach which was used in the ESPON program for the analysis of regional situations. The basic territorial level of analysis is the distribution of world population and CO2 emission by states (Figure 2-2-c) where we can easily compare the share for both criteria (application of G-Scale). According to the fact that CO2 emission are not limited to the territory of a given states but produce a global change of the climate of the earth, it is logical to consider that it is a common responsibility and that, in a situation of international justice, each state should not produce a share of CO2 greater than its share of population without prejudice for the rest of mankind. From this point of view, the map indicates clearly that all states of the

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ESPON area in a situation of excess of CO2 emission according to their population3. At this level of analysis, it is very difficult to obtain an international consensus, especially if we take into account the historical dimension of the phenomena (T-scale>4) and the fact that a major part of the actual stock of the CO2 has been produced by industrial countries from Europe and Northern America in XIXth and XXth centuries. Emerging countries have full right to invoke this historical responsibility of most developed countries and to suspect them to use sustainable development as a way to limit their actual economic growth. To analyse the phenomena at different territorial scales like division of the world in 17 regions or 3 macro-regions (figure 2-2-b) is especially interesting because it introduces alternative political approaches of the solution to the global problem of climate change. At regional level (figure 2-2-b), we can for example notice that the fusion of China, Japan and Korea into a single unit produces equilibrium between the share of population and CO2 emission. It means that the objective of global equilibrium could be achieved in this case by a technical cooperation between the states of the region instead of separate actions at national level. Japan has indeed proposed to obtain delays for the reduction of its own emission of CO2 but to help China to develop industrial technologies producing less CO2. This is typically a pragmatic win-win political solution if it is correctly applied. The European Union has also proposed to fix a global objective for all members States in order to have more smoothness in the application of Kyoto’s protocol. But in this case the solution is not sufficient to obtain equilibrium because all members States have excess of CO2. It is only at the upper level of world divided in 3 macro-regions (figure 2-2-a) that Europe can eventually develop the same strategy as Japan. In this scenario, Europe should develop partnerships with all states of Africa, middle-east and former Soviet Union in order to really fulfil its obligation at the world level. A unilateral reduction of CO2 emission in UE25 would probably be economically difficult to support for European industry and it would not necessary be efficient at the world scale because industries producing CO2 would certainly decide to relocate in neighbouring eastern and southern periphery of Europe. It is typically a lose-lose solution, derived from the fact that the geographical scales of political action is not the good one. To complete the picture, we can notice that USA are not able to develop an equivalent strategy of macro-regional cooperation because, even if they involve Northern and Southern America in a common project, there would remain a strong excess of CO2 as compared to population of Americas. It is only through cooperation with major States of Asia, such as India, that USA could achieve the same political objective as EU or Japan.

3 The so-called « economic ecological efficiency » which is based on the comparison between share of emissions of CO2 and share of world GDP (expressed in $ and not pps) is a real moral failure which is nevertheless used by many states to justify their actual excess of CO2 emission. If European policy makers have a minimum sense of responsibility, they should not use such argument in negotiations!

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Of course the approach developed above is strongly influenced by the choice of territorial divisions which has been used for the delineation of world regions and macro-regions. We can suspect that another definition of the ESPON regions would have produced another political result. Therefore it is necessary to complete the analysis by another cartographic approach which computes the global potential of CO2 emission in a neighbourhood of 1000 km without considering political boundaries (figure 2-3). This map of CO2 potential which was presented in the preliminary report of ESPON 3.1 on “Europe in the World” displays a perfect representation of the ”Economic Triad” and is strongly correlated with the map of GDP potential established with the same parameter. It indicates clearly that it is impossible to build a world policy of reductions of CO2 without an international policy at macro-regional level, with at least three big agencies of objective in northern part of the earth and eventually three smaller agencies in southern part (because of equivalent small peaks of CO2 emission in southern Africa, southern America and Oceania). This small example demonstrates that it is not possible to build new policy without building new tools of analysis and representation: “the limits of my language mean the limits of my world” (L. Wittgenstein).

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Figure 2-2 : A multiscalar Territorial Analysis of Kyoto’s Protocol

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Figure 2-3 : A global spatial vision of Kyoto’s Protocol

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3 MAP TEMPLATES AND GRAPHIC HARMONISATION

The objective of the work package on databases and maps is to make « proposal for an effective statistical and cartographical framework for the needs of the research, in particular in relation to the questions of geographical projection and by adapting the level of aggregation to the specific needs European policy ». This work package is more generally responsible from the harmonization of maps produced by the partners. The thoughts for maps harmonization will be present here with the template proposed to partners for each scale /theme of analyse. One of the tasks for the ESPON Project 3.1 was to develop new cartographic and spatial analysis tools that could be used by all other TPGs of the ESPON Programme, and at a later stage also by end-users. ESPON is not a single institution. Instead, it is a research project network. Every project includes a team of partners from different European countries. It was sensed from the outset that ESPON needed some common base and means to steer the various TPGs so as to achieve coherence and identity in the ESPON outcome. The TPG 3.1 proposed a few templates for the design of European territory maps (projection, shape, design …). As ESPON is above all about spatial patterns and trends, it was clear that most of the outcomes would be shown on maps. Therefore, a common ESPON map layout, for all separate TPGs, was essential. Project 3.1 designed a first draft for map layout. The design of maps showing the European situation in the world entails many technical questions (projection, framework, aggregation level …) of crucial importance from scientific and political viewpoints. The third Interim Report (annexe-b) brought to the fore a map projection which gives the opportunity of a polycentric, but universal representation. This polycentric projection had been justified: “none of the world economic centres is stressed, as far as it can be used in any direction. This implicit message is essential for the analysis of a polycentric Europe in a polycentric world”. All those thoughts were very useful but now, we need to settle down our choices for map presentation. It ensures coverage of all regional levels for the ESPON countries (an EU29, a pan European and a world templates). For a complete cartographic presentation, adjacent parts of the surrounding countries were added (the “non ESPON space”), including the map background, borders, and coasts. The Remote Areas and islands are included as insets. Thus, the ESPON TPGs obtained a unique tool to generate based thematic maps. The standard ESPON map is already used in the cartographic representations in

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all Interim Reports. Now it is necessary to offer similar rules for the design of maps of Europe in the world, which implies many possible choices.

3.1 Which Cartographic Projection?

The ESPON program decided to harmonize the maps that are produced in the network and the TPG 3.1 has proposed specific templates for the design of map of the European territory (projection, shape, design …) (Templates 1). 3.1.1 Template 1 « EU29 »

3.1.1.1 Projection

The map is projected in Lambert azimuthal equal area with the centre of 50°N and 15°E

3.1.1.2 Geographical influence

Figure 3-1 : ESPON Space

For the representation of world data and comparisons and as Claude Grasland and Christian Grataloup explained in Annex B of the third interim report, the right planisphere does not exist. The transformation from sphere to plan implies

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necessarily an undesirable bending of areas and/or angles and/or global shapes. Furthermore, a map of the World can be unsatisfactory because the global world is economically organized as a ring around the earth while a map is a plane representation with edges defining a single centre. The more traditional projections (projections 1 and 2), like Mercator or Winkel projections directed toward the north and centred on Europe, show an acceptable world organization of the XIXth century at the time when the Old Continent ruled the other regions of the Earth. Today we live in a polycentric world. And pictures that try to provide evidence of multiple centralities and competitive influence areas should not induce biases related to false polarization introduced by the choice of map projections. It is the reason why C. Grasland and C. Grataloup proposed ESPON to choose a polar projection, setting Northern Hemisphere at the centre, simply because it is the place where 90% of the human beings are living. Such a map can easily be underlined in order to emphasize the various centralities (Template 2). 3.1.2 Projection 1: The Mercator projection

Figure 3-2 : Mercator projection

While Mercator maps do not have a grid (except in latitude and longitude), there is an implicit grid, and since this is how they are constructed. The Easting and Northing values shown here are for a 1:1 scale chart, and also note that these values are measured on the chart, not on the earth! Mercator’s projection preserves exactly what sailors needed: shapes and directions. On a globe, the lines of longitude (measuring east-west position) converge at the poles and the lines of latitudes (measuring north-south position) are unvarying distant apart. In a Mercator projection, the lines of longitude are straight vertical lines equal

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distance apart all latitudes, and horizontal distances are stretched above and below the equator this stretching is exaggerated near the poles. 3.1.3 Projection 2: The Winkel projection

Figure 3-3 : Winkel Projection

In true azimuthal projections, all directions are preserved from the reference point, usually tangent at the centre of the map. The third and best known of Oswald Winkel's hybrid projections is defined by a simple arithmetic mean including the equidistant cylindrical projection, using an arbitrary value for standard parallels (the author preferred approximately 50°28"N/S; another common value is 40°N/S); Winkel's Triple projection is peculiarly irregular: it is neither equal-area nor conformal; parallels are straight at Equator and poles, curved elsewhere; scales are constant (but not equal) only at the Equator and central meridian. Nevertheless, it manages to present a pleasant and balanced view of the world, which led to its choice by several popular atlases. 3.1.4 Template n°2 « World »

3.1.4.1 Projection

The map is projected in North Pole Azimutal Equidistant with the centre of 90°N and 0°E.

3.1.4.2 Geographical influence

None of the world economic centres is advantaged; the map can be turned in any directions. This implicit message is essential for the analysis of a polycentric Europe in a polycentric world.

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Figure 3-4 : World North Pole Azimutal Equidistant projections

In the ESPON context, it is important to bring to the fore a map projection which gives the opportunity of a polycentric, but also universal, representation. Of course, Southern Hemisphere is badly treated (the disappearance of Antarctica), which proves that any planisphere introduces an implicit subjectivity. With this polar projection none of the world economic centres is stressed, as far as of such map can be used in any direction. This implicit message is essential for the analysis of a “polycentric Europe in a polycentric world”. 3.1.5 Template 3 « World 2 » Some flows Europe/ World are not always well represented with this polar projection. In order to improve these representations we offer an additional template (template 3a and 3b): a polycentric projection projection with a zoom on Europe and a Hammer-Aïtof projection. This projection allows a pleasant and balanced view of the world and to puts forward the particular relations between Europe and the world in terms of the directions shown. This template is still under preparation.

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Figure 3-5 : Template for Flows between Europe and the world

The Hammer-Aitoff equal-area projection, also called the Hammer projection, is a map projection that is a modification of the Lambert azimuthal equal-area projection. It consists of halving the vertical coordinates of the equatorial aspect of one hemisphere and doubling the values of the meridians from the center. Like the Lambert azimuthal equal-area projection, it is equal area, but it is no longer azimuthal. This projection is often used for thematic maps of the world and very effective to represent flows between Europe and the rest of the world. It’s the one we choose as an alternative to the North Pole Azimuthal Equidistant projection

Figure 3-6 : Hammer-Aïtof Template for Flows between Europe and the world

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Another template has to be produced so as to have a European vision in its wider context, a pan European vision (Template 4). The strategic vision of ESPON 29 territory can also be approached in a large Europe. A pan-European template has been build. We have chosen a relatively large definition of the European neighbourhood, both in eastern and southern direction, in order to have a European vision in its wider context. European widening eastward and southward is based on objective criteria. This is why, considering southern and eastern countries of Europe becomes so important. Middle East and Persian Gulf, not within Europe, are in fact, a competitive area. Such a template allows for a systemic view point. The fact of limiting ESPON research program to EU27 or EU29 can generate illusions and induce mistakes in the analysis of main trends shaping the European territory. In many cases, the perception of inequalities, potentialities, polarizations …will be fully transformed according to the geographical shape and the basic territorial units used by observers. It is obvious that the situation of Europe would appear very different if the future scenarios included peripheral areas which are strongly related to Europe like S.E. Mediterranean countries, Africa. This special projection allows for showing all the features about Europe and his close neighbours. The projection is centred on EU29 and is enlarged to the South by the North African countries (some of the analyses show a special limit formed by the Sahara borders) and to the East by the Balkans countries plus Turkey, Russia, Azerbaijan and Kazakhstan. The South and east limits are not actually precisely defined. It will depend on subjects and research results. Besides the previous ESPON report had shown that the ESPON view was certainly the most interesting one in a short term perspective. But the pan-European view and the global view should be taken into account when European policy makers try to elaborate strategies in a long-term perspective.

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3.1.6 Template 4 « Pan European »

3.1.6.1 Projection

The map is projected in Lambert Azimuthal Equal Areas with the centre of 50°N and 18°E.

3.1.6.2 Geographical influence

Figure 3-7: Europe Lambert Azimuthal Equal Areas projection

3.1.7 Template 5: « World and regional MIX »

Figure 3-8 : World and regional Template

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3.2 Which divisions?

For a better comparison of maps, different levels of divisions have been defined so as to provide enough layouts for all ESPON projects and data levels. The European Union as any international organization should produce geographical divisions of the world adapted to their statistical, scientific, and political needs. 3.2.1 The national level The list of States that should be included in the ESPON database “Europe in the world” is not a trivial question. For example, it is well known that Taiwan is never present in the statistical databases of the United Nations because China does not recognize its existence as an independent State. But, on the other hand, the CIA has introduced Taiwan in its “World Fact book” 2 which presents the official position of US Government. An ESPON Atlas of the world would necessarily lead to difficult political questions because, as in the case of the World Fact book, it could be considered as a form of official position of the European Union. More complicated but more important is the question of the delineation of “regions” of the world because it implies necessarily a mixture of ideological, scientific and political constraints. Likewise Nuts divisions, we create special “world-regions” divisions in order to be able to analyse phenomena in different visions the WUTS

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Figure 3-9 : « WUTS »

WUTS 0 WUTS 1

WUTS 2 WUTS 3

WUTS 4 WUTS 5

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The list of States that should be included in the pan European database depends on the subject matter. The South and East limits would be chosen by authors. Choices of the national level are presented in figure 3-10, 3-11 and 3-12.

Figure 3-10 : « ESPON Europe divisions »

Figure 3-11 : « WORLD divisions »

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Figure 3-12: « Pan European » divisions.

3.2.2 The “regional” level Figure 3-13 shows the regional delineation of European ESPON countries. We choose NUTS 2 or 3 according to the statistic information.

Figure 3-13 : Regional delimitations of European ESPON countries

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3.3 Which message?

The maps are very powerful tools of communication and they can convey implicit or explicit political message. These different templates have been discussed and approved in a scientific and political sense. You can read more details on Volume 1 Part A of this report.

3.4 Map background and countries

Figure 3-14: Map backgrounds

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3.4.1 Countries Fill colour: R,G,B = (255,255,240) Outline colour: R,G,B = (255,255,255) Outline width: 0.2pts 3.4.2 Countries and regions out of UE29 Fill colour: R,G,B = (251,247,242) Outline colour: R,G,B = (255,255,255) Outline width: 0.2pts 3.4.3 Legends The previous choices have to be completed by colours and graphic representations. The discussions focused mainly on choropleth and proportional maps, selection of class intervals and tonal shadings. In fact it is very important to avoid the failure resulting not from different graphical traditions, but from theoretical uncertainties concerning the general principles of the graphical language. Graphical signs are assimilated to a discourse that could be read, understood and criticized on grounds of efficiency, and not simply for reasons of personal preference or style. In order to obtain comparable maps, a precise protocol is proposed at each step. We propose a monochromatic system, gradual shading of two tones, graduated symbols, qualitative shadows, typology with or without hierarchy. We tried to explore each possibility, every alternative for cartographic keys and every possible graphic treatment of information. A few examples of layout are offered so as the whole of ESPON members' maps are homogeneous in presentation while adhering to graphic semiology rules. Quantitative figures for rates are often given as sorted data. It is possible to use up to 8 categories when gradation is simple and up to 3 categories both sides, when gradation is double. These gradations must be monochrome or a matching gradation (rainbow gradation). A G scale is proposed. It allows to get a data presentation based on a weighted index in accordance with size and order of what is shown. Such a scale is a proxy for a rainbow gradation in 5 categories (beyond this, it would be difficult to grasp any information). Qualitative data or typologies exclude any particular order. When what is at stake, is an opposition between two elements, one should select red and blue

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colours. Conversely, when many meanings must be shown together at the same time, several colours should be selected with same graphical weighting. Finally, gross quantitative data should be shown in accordance with different sizes: circles for fixed geographical data and arrows for flows. For any additional information, a colour can be added to circles in accordance with above-described principles.

Figure 3-15 : legend propositions

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Some examples:

Figure 3-16: Minimum and maximum values have always to be written clearly.

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Pan European Layout

Figure 3-17 : 4 examples of Pan European layout

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World Layout

Figure 3-18 : 4 examples of world Layout

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Espon EU29 Layout

Figure 3-19 : 2 examples of ESPON layout

3.5 Graphic templates

Graphics templates are realised in order to insure strong harmonisation of further production and opportunity to present coherent graphics collection at the end of the project.

Figure 3-20 : Graphics layout

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Figure 3-21 : Colours chart

Simple opposition Typology without hierarchy

-

+0,5,85,0

90,5,95,0

20,85,0,0

10,80,95,0

80,80,5,0

0,40,95,0

CMJN

45,0,0,0

55,0,45,0

0,40,20,0

0,0,50,0

0,20,45,0

10,40,0,0

CMJN

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4 DATA MINING AND DATABASE BUILDING

4.1 Data mining and database building

One of the objectives of the project Europe in the World is to provide the ESPON program with datasets that will allow to conduct future analyses on the position of ESPON area in the World and/or ESPON countries relations with the World. It is then compulsory to build standardised databases in order to allow the comparison of analyses, the common use of the results in cross thematic questions and to allow the reproduction of statistical analyse step in the future, for example if we could get some updated data on our subject in next few years. What is quite new for the project 3.4.1. “Europe in the World, the World in Europe,” in comparison with other projects, is that we aimed to build databases related to the world i.e. at State scale and that we did not use very often databases at larger scales like NUTS2 or NUTS3, except in the part related to the influence of the World in ESPON area (Internal differentiation of European territory, FR – Vol.1 – part 6). More, we aimed to build, whenever it was possible, databases taking into account long time period in order to introduce dynamic analysis of ESPON in the World. The list of variable and indicators used in the project change over time according to the discovery of new databases that match with our concerns, the rise of new issues on which we focus our attention and most of all, the quality and availability of the datasets. The following part is a synthetic presentation of the databases used (Data and main sources used) and finally describes the building and harmonisation of the databases that have been used in the project (Harmonisation of database). 4.1.1 Data and Main Sources: The ESPON program gathered a vast amount of data and indicators, either in each TPG either provided by Eurostat. The table 8 of the Nijmegen Guidance paper provide a helpful list of all the indicators gathered in the ESPON program. However in the framework of our project it was quite difficult to use them intensively. First because those indicators have not been collected on a long term basis, but above all because, most of them have been gathered at a NUTS2 or NUTS3 level and are only available for European or ESPON countries. Some parts of the projects (WP 3.4 internal differentiation of European territory) fruitfully used the indicators provided by other TPG but it will not be the case for most of our work package related to the world. As a consequence a specific database has been built and that have been done mainly by RIATE and Géographie-cité with an active collaboration of the ESPON project 3.2 on scenarios.

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4.1.1.1 Structural databases

Concerning population and GDP we mainly used the Maddison databases. This database is published by the OECD and freely available on Mr Maddison website (http://www.ggdc.net/~Maddison/). However due to copyright matter and in order to provide those data to the ESPON database the C.U. has to buy the rights to Mr Angus Maddison. This dataset provide the populations and GDP of all national territorial units of the world from the first year after J.C. to 2001. Concerning far past time a lot of data are missing. From 1900 to 1950 all the African continent and some parts of Asia are missing. After 1950 there are very few missing data. All the data are derived from “The World Economy: Historical Statistics”, OECD Development Centre, Paris 2003. GDP figures are in millions of 1990 US$ (converted at Geary Khamis PPPs). This database providing long term data on population and GDP have been very useful for our exploratory analysis. The UNCTAD Handbook of Statistics On-line, (http://www.unctad.org/), provides numbers of development indicators for the most recent years for more than 220 countries but a lot of data are missing. Some trade data (value of exportations / importations by countries) are available from 1950. This website provide too the Foreign Direct Investments from 1970. The World Development Indicators, 2003, a World Bank publication provide also a large number of indicators (575), describing about 210 countries. Indicators are related to demography, environment, economy, state and market, and global links. Available periods range from 1960 to 2001. UMS RIATE owns the DVD-ROM providing the data, but they can be used only by the transnational project group while the project is going. Some demographic databases at the World and ESPON level have been built from the United Nation World Population Prospect 2004 by the project 3.2. at ESPON level and at the World level conjointly with the project 3.4.1. This source provides estimates of demographic data (fertility, mortality, median age, migrations…) from 1950 to 2005 for all World countries. It also provides prospective according four scenarios (low, medium, high and constant) from 2005 to 2050. This database can be used among participating partners in the EU Project "European Spatial Planning Observation Network" (ESPON), but however they have to stay within the boundaries of the ESPON network and they must be cited as follow when used: “United Nations (2005). World Population Prospects: The 2004 Revision. CD-ROM Edition - Extended Dataset. New York, NY: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat”.

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Finally we also used the CEPII database (Centre d’Etudes Prospectives et d’Informations Internationales) that provides data on countries and their main city or agglomeration. Variables, which applied to 238 territorial units, describe languages, historical links (like the colonizer country), the belonging to one continent, or the fact that the territorial unit is landlocked or not. It is available on the CEPII website at the following address: (http://www.cepii.fr/anglaisgraph/bdd/distances.htm).

4.1.1.2 Flows databases

The program ESPON 3.4.1 Europe in the Word will use two distinct kinds of flows databases. The first ones concern the flows between cities, the second ones between countries. The Europe in its network key question takes into account world inter-city air flows database at two different periods during the last ten years. While air flows are among the worldwide data that are the easiest to obtain, the different sources are not compatible the ones with the others and it is not evident to harmonize them. In addition, one should, from the begin, be also aware that a database that collect data on flows between the airports/cities gives different figures from a database that collect data on the traffic of each airport/city. This difference comes, in particular, from the through traffic. Working on air flows for more than ten years, and having tested different sources from different international institutes and organization, the responsible team of this question has chosen, for the flows figures, two major databases : from OACI and from ITA. Several reasons can explain this choice. In particular: the OACI database is quite the only one to provide a database that is comparable for a long period of time. While the ITA database is for a few international linkages more accurate and could constitute a complementary source of information. The other main difficulty of this key question relates to the air freight figures. While main analysis and conclusions will be drawn from the number of air passengers that travel all over the world, one cannot avoid taking into account the tons of freight that are carried between the cities. Indeed, for the last ten years, the air cargo recorded considerable increases taking into account the fall in the costs in air transports. But at that stage the collection of such data is not guaranteed partly because of the reliability of the sources. Some figures and databases have already been tested and used in Nadine Cattan’s previous researches and in particular in ESPON 1.1.1.

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Other Flows databases. The program ESPON 3.4.1 Europe in the Word will also use flows databases describing bilateral relations between countries. Here we could use trade flows between countries like the International Trade Centre database (UNCTAD/WTO United Nations Statistics Division) about export and imports flows. The DG trade (http://europa.eu.int/comm/trade/index_en.htm) provide also a database on trade flows for extra European countries quoting for each of them the 20 first importing and exporting partners. The files provide also data on imports and exports by 21 kinds of products (like vegetable products, wood and article in wood, textiles and textiles articles, miscellaneous manufactured articles). Relation for a country is describing for Europe as a whole and not detailing all European countries. 127 countries and groups of countries are described than mean it is not a exhaustive database. More, data are available only for the year 2004. Flows databases seem to be more difficult to obtain, particularly concerning subjects like migration flows and long term databases are scarce. Proximity databases. In order to analyse the relation between the flows intensity between two countries and their proximity is useful to have a distance database between each countries. The CEPII bilateral file provide different kind of distances between 28 224 pairs of countries (168 * 168). Two kind of simple distances are provided one between the most important cities or agglomeration in term of population and one between the capitals cities. Some weighted distances (by to population) are also proposed. This database describes also some common cultural or historical facts as a common official and ethnic language, a common colonizer between two countries. This database provides also a very precious variable describing the fact that two countries were part of a same administrative entity for a long period in the past. This is especially useful to take into account the common past between territorial units that formerly belonged to the same Empire as Austria and Hungary, and countries that have been split in two or more parts as the former Czechoslovakia or Yugoslavia.

4.1.1.3 Specific databases

A specific database will be built by the UMS RIATE based on a survey on the ESPON community members, i.e. researcher, administrative and politicians of the ESPON program. The questionnaire is now in a test phase and the survey will be held during the ESPON meeting in May in Luxembourg. Apart from description data (sex, age, activity in the ESPON program), the survey is about, first, the delimitation of Europe, second the delimitation of world regions. The Europe

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database describes for each country its belonging of Europe or not. The World Regions database is build in the same way than a matrix of flows, describing the belonging of two territorial units to the same region. Another specific database on mental maps will be built. It aims to gather the divisions of the world proposed on maps by big firms, non governmental organizations and international organisations websites.

4.1.1.4 databases for the neighbourhood studies

OECD: Official development Assistance data base (http://www.oecd.org/). The DAC statistics measure the flows of aid and other financial resources to developing countries and countries in transition, broken down by major category of expenditure. Such historical series make possible useful comparisons between major donors whether they are countries (22 donors among which EU 15 members…) or multilateral organizations and international institutions such as European Commission, Arab development agencies or regional banks. DAC Statistics are collected annually since 1960 from the Members of the OECDs Development Assistance Committee (DAC). The data cover aid loans and grants, other official flows, private market transactions and assistance from non-governmental organisations to each recipient country and recipient countries combined. The data make a useful distinction between the commitments of the official assistance and the really observed disbursements. Other useful data concern the destination of Private Direct Investment and Other Private Capital. The aid flows are measured in constant 2003 dollars, which make possible comparisons of long periods of time. OECD: SOPEMI. For several years, the team SOPEMI (système d’observation permanente de migrations internationales) has been analysing trends in international migration - flows or stocks - and policies in all OECD member countries and in selected non-member economies. Its publications provide the researchers with detailed descriptions and useful tables of the flows, the different channels of immigration and the diversity of nationalities involved. The SOPEMI database releases useful tables (by country) about a broad range of topics related to international migrations: origin and category of migrants, inflows and stocks of foreign populations by nationality and country of origin, geographical breakdowns of foreign labour force… A significant part of the data, which the yearly publication of the SOPEMI is based on, is available on the website of the OECD, at the following address: http://www.oecd.org/document/36/0,2340,en_2649_33931_2515108_1_1_1_1,00.html

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FMI: International trade Statistics Yearbook. This annual publication, released since 1996 by the Direction of Trade Statistics of the International Monetary Fund, provides data on the country and area distribution of countries’ exports and imports as reported by themselves or by their partners. Thanks to this yearbook, one knows the geographical breakdown of the international trade of good of about 186 countries: the destination of their exports and the origin of their exports, in value (millions of current dollars). These data are available for seven years in each annual volume. This publication allows the researchers to build an o/d matrix of international trade. More detailed data, in the DOTS quarterly issues, are available for each quarter of the current and of the previous years for about 156 countries, and for ten quarters and five years for the world and area tables. The yearbook is not available on the web. Some data are missing but gaps are very few. World Tourism Organization. The Compendium of Tourism Statistics provides a short quick-reference guide on the major tourism statistical indicators in 209 countries and various territories around the world from 2000 to 2004. Data are provided about the following topics: inbound tourism, domestic tourism, outbound tourism, tourism industries. The Yearbook of Tourism Statistics contains useful information and data for the analysis of the economic impacts and of the geographical distribution of tourism in most countries around the world (206 countries in the two volumes of the 2006 issue), especially the total arrivals and overnight stays associated to inbound tourism and the breakdown by country of origin for the period 2000-2004: statistics about the arrivals of tourists or visitors at the national borders, statistics on accommodation establishments, statistics about the overnight stays. Such a publication allows the researchers to know the destination of tourist from each ESPON country and the origin of tourists who go to the neighbour countries of EU. World Bank. The World Bank's Data Group provides data on all aspects of social and economic development. For example, the World Development Indicators includes more than 900 indicators in over 80 tables related to many topics: agriculture, environment, finance, infrastructures, purchasing power, GDP, demography, etc. Data are available for 208 large and small economies. Every registered user has a total access to an extensive online database which provides statistics about hundreds of indicators on long time series, from 1960 up to 2005. The data base is updated each year. Nevertheless, it shows significant gaps for many countries before 1990, especially for former Soviet Republics and East Asia countries. In such case, data must be extracted form other sources and harmonized with those of the World Bank as much as possible. For the period after 1990, the database is much more complete.

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Statistical offices in the Baltic States. The Central Statistical Office of Estonia is based in Tallinn. A large part of its statistics is available on its web site (http://pub.stat.ee/px-web.2001/dialog/statfileri.asp), sorted in two major categories: a general statistical database and a regional development database. The second one is divided into six major chapters: economy, environment, population, social life, population census of 2000 and agricultural census of 2001. Inside each topic, it is possible enter an interactive database which allows the researchers to build their own datasheets and to download them as excel files. A majority of these statistics are available for the period running from 1990 to 2005. The Central Statistical Bureau of Latvia also has a website in which the database is built on a same pattern. The address is: (http://data.csb.lv/EN/dialog/statfile1.asp?xu=&yp=&lang=1). Many useful data are not available on this website and have to be purchased directly in Riga and Tallinn. 4.1.2 Harmonization of datasets In order to allow the cross thematic analysis of results elaborated by each partner teams in WP2, the statistical harmonisation is of great importance.

4.1.2.1 World databases: 168 countries

We established a minimum list of territorial units that necessarily have to be covered by data collection. First, we use, as a criteria, the share of the world surface, population and GDP of each territorial unit. If a territorial unit count less than one millionth of the world surface OR the population OR the world GDP, we decided to consider it as being a part of the rest of the world. Before using any statistical criteria of selection, the choice of territorial unit is first of all drive by the question of their sovereignty. First we included the full sovereign territorial units with their main parts and overseas part (i.e. France + Martinique, Guadeloupe, Guyana and Reunion). Then there the question of associated territories has to be considered (In the case of France: Mayotte, Saint-Pierre & Miquelon…). They have not been added to the database. The remaining territorial units are more problematic between States that are not fully sovereign (Puerto Rico) and those States that are not recognised by all the other (Taiwan, Western Sahara, West Bank & Gaza…). The following table gives the list of the 168 countries kept in our analyses (Table 4-1).

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As shown in the table, each territorial unit is represented by a code in three letters (ISO) that is the first column of all the databases we build to allow to cross the databases (for multivariate analysis for example). In the second interim report, the native codification used by statistical organisation or project partners will be systematically compiled in a dictionary of territorial unit. More, we’ll build a table of correspondence for territorial units which has been subject to modifications in order to establish coherent time series in a medium or long term perspective).

4.1.2.2 Euromed database

For the specific analyses undertaken under the following Work-Packages, WP 2.5 (European Neighbourhood) & WP 3.3 (Delimitation of European territory), we decide to build intermediate databases that would provide a shorter list than the all world but larger than those related to the conventional ESPON space. This intermediate space should be able to provide a framework for the analysis of the influence area of Europe and the main discontinuities (in term of demography, wealth etc…) between the European space and the neighbours. During the project 3.4.1. kick-off meeting, discussions were on the meaning of neighbourhood. They are two different kinds of neighbour countries: those that are very close to Europe (spatial neighbourhood) and those that have very strong links with one (or more) European country (networking neighbourhood). According to the fact that, in this field, our objective is related to the delimitation of European influence area Europe limits, it seems more relevant to choose the spatial neighbourhood. (More, the networking neighbourhood should be analysed in the WP3.2 networking the world, at the world scale. The choice to make analysis in an intermediate space implied to build a specific map template whose construction is detailed in the following part: Standards for cartography. The table (Table 4-2) gives the list of the 82 Euromed countries kept in our analyses.

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Table 4-1 : countries for Europe in the World

ISO Name ISO Name ISO Name AFG Afghanistan GHA Ghana NIC Nicaragua AGO Angola GIN Guinea NLD Netherlands ALB Albania GMB Gambia NOR Norway ARE United Arab Emirates GNB Guinea Bissau NPL Nepal ARG Argentina GNQ Equatorial Guinea NZL New Zealand ARM Armenia GRC Greece OMN Oman AUS Australia GRL Greenland PAK Pakistan AUT Austria GTM Guatemala PAN Panama AZE Azerbaijan GUY Guyana PER Peru BDI Burundi HND Honduras PHL Philippines BEL Belgium HRV Croatia PNG Papua New Guinea BEN Benin HTI Haïti POL Poland BFA Burkina Faso HUN Hungary PRI Puerto Rico BGD Bangladesh IDN Indonesia PRK North Korea BGR Bulgaria IND India PRT Portugal BHR Bahrain IRL Ireland PRY Paraguay BHS Bahamas IRN Iran QAT Qatar BIH Bosnia IRQ Iraq ROU Romania BLR Belarus ISL Iceland RUS Russian Federation BLZ Belize ISR Israel RWA Rwanda BOL Bolivia ITA Italy SAU Saudi Arabia BRA Brazil JAM Jamaica SCG Serbia/Montenegro BTN Bhutan JOR Jordan SDN Sudan BWA Botswana JPN Japan SEN Senegal CAF Central African Republic KAZ Kazakhstan SGP Singapore CAN Canada KEN Kenya SLE Sierra Leone CHE Switzerand KGZ Kyrgyzstan SLV El Salvador CHL Chile KHM Cambodia SOM Somalia CHN China KOR South Korea SUR Suriname CIV Côte d'Ivoire KWT Kuwait SVK Slovakia CMR Cameroon LAO Laos SVN Slovenia COD Zaire (Congo DRC) LBN Lebanon SWE Sweden COG Congo LBR Liberia SWZ Swaziland COL Colombia LBY Libya SYR Syria CRI Costa Rica LKA Sri Lanka TCD Chad CUB Cuba LSO Lesotho TGO Togo CYP Cyprus LTU Lithuania THA Thailand CZE Czech Republic LUX Luxembourg TJK Tajikistan DEU Germany LVA Latvia TKM Turkmenistan DJI Djibouti MAR Morocco TTO Trinidad and Tobago DNK Denmark MDA Moldova TUN Tunisia DOM Dominican Republic MDG Madagascar TUR Turkey DZA Algeria MEX Mexico TWN Taiwan ECU Ecuador MKD Macedonia TZA Tanzania EGY Egypt MLI Mali UGA Uganda ERI Eritrea MLT Malta UKR Ukraine ESH West Sahara MMR Burma (Myanmar) URY Uruguay ESP Spain MNG Mongolia USA United States EST Estonia MOZ Mozambique UZB Uzbekistan ETH Ethiopia MRT Mauritania VEN Venezuela FIN Finland MUS Mauritius VNM Vietnam FJI Fiji MWI Malawi WBG West-Bank and Gaza FRA France MYS Malaysia YEM Yemen GAB Gabon NAM Namibia ZAF South Africa GBR United Kingdom NER Niger ZMB Zambia GEO Georgia NGA Nigeria ZWE Zimbabwe

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Table 4-2 : Euromed list of countries

ISO Name ISO Name ALB Albania KWT Kuwait AND Andorra LBN Lebanon ARE United Arab Emirates LBY Libya ARM Armenia LIE Liechtenstein AUT Austria LTU Lithuania AZE Azerbaijan LUX Luxembourg BEL Belgium LVA Latvia BGR Bulgaria MAR Morocco BHR Bahrain MCO Monaco BIH Bosnia MDA Moldova BLR Belarus MKD Macedonia CHE Switzerland MLI Mali CYP Cyprus MLT Malta CZE Czech republic MRT Mauritania DEU Germany NER Niger DNK Denmark NLD Netherlands DZA Algeria NOR Norway EGY Egypt OMN Oman ERI Eritrea POL Poland ESH West Sahara PRT Portugal ESP Spain QAT Qatar EST Estonia ROU Romania FIN Finland RUS Russian Federation FRA France SAU Saudi Arabia FRO Fareo Islands SCG Serbia/Montenegro GBR United Kingdom SDN Sudan GEO Georgia SEN Senegal GIB Gibraltar SJM Jan Mayen GRC Greece SMR San Marino GRL Greenland SVK Slovakia HRV Croatia SVN Slovenia HUN Hungary SWE Sweden IMY Isle of man SYR Syria IRL Ireland TCD Chad IRN Iran TKM Turkmenistan IRQ Iraq TUN Tunisia ISL Iceland TUR Turkey ISR Israel UKR Ukraine ITA Italy UZB Uzbekistan JOR Jordan WBG West-Bank and Gaza KAZ Kazakhstan YEM Yemen

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4.1.2.3 Espon database

For projects that will analyse more in detail the European space according to the world influence, (W.P. 3.4 Internal differentiation of the European territory, and some cases studies). In those cases the databases and indicators built by other ESPON projects (at NUTS2 or NUTS3 level) will have to be used. The following Table 4-3 reminds the ESPON countries.

Table 4-3 : ESPON list of countries

ISO NAME AUT Austria BEL Belgium CYP Cyprus CZE Czech republic DNK Denmark EST Estonia FIN Finland FRA France DEU Germany GRC Greece HUN Hungary IRL Ireland ITA Italy LVA Latvia LTU Lithuania LUX Luxembourg MLT Malta NLD Netherlands POL Poland PRT Portugal SVK Slovakia SVN Slovenia ESP Spain SWE Sweden GBR United Kingdom BGR Bulgaria NOR Norway ROU Romania CHE Switzerland

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5 METHODOLOGICAL FRAMEWORK FOR THE ANALYSIS OF FLOWS AND

STRUCTURES

The aim of this part (based on an annex of answer to the tender) is to illustrate the methodology which will be developed in WP6. To make the reading of this part easier, we have systematically take example of simple datasets of flows and structure related to 7 western Mediterranean countries (France, Spain, Italy, Morocco, Algeria, Tunisia and Libya).

5.1 Preliminary sample of methods for flows analysis

It is not the place to define all possible methods which can be applied to the analysis of flows but it is important to give a first overview of the different interpretations and applications which can be derived from matrix flows in conceptual terms. To illustrate this, we will analyse a very simple sample matrix of trade flows between selected states from Northern and Southern Mediterranean that will be considered for simplicity as an isolated system. Normally, the rows define the origin of flows and the column their destination as in table 5-1 where, for example the figure located in 1st row, 2nd column indicate that the average annual value of exportation from France to Italy was 27.6 billions of dollars during the time period 1996-2000.

Table 5-1 : Mean annual value of trade flows 1996-2000 (millions of US $)

Fij FRA ITA ESP ALG MAR LBY TUN Total FRA 0 27626 24224 2145 2322 297 2103 58717 ITA 27446 0 12873 830 561 977 1564 44251 ESP 19739 9525 0 664 966 162 334 31391 ALG 1878 2137 1665 0 124 1 79 5884 MAR 2533 427 739 14 0 107 53 3873 LBY 467 4269 1199 2 58 0 241 6235 TUN 1640 1209 276 35 40 225 0 3425 Total 53703 45193 40976 3689 4071 1770 4374 153775

5.1.1 Absolute level of flows and hierarchy The hierarchy of flows in absolute terms is the first information to consider in the analysis. It is of course related to the size of territorial units which send (push factor) and receive (pull factor) but it has also a specific significance and can help to define a hierarchy of relations between territorial units. In the example of table 5-1, this analysis of the magnitude of flows reveals a clear typology of relations of high magnitude between northern Mediterranean countries (10-30 billions of dollars), low magnitude between southern Mediterranean countries

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(less than 0.3 billions of dollars) and medium magnitude between northern and southern countries (0.5-5 billions of dollars). The symmetry/asymmetry of flows is a topic of crucial importance for the political analysis of relation between territories. For this reason, the geographer W. Tobler has propose to transform systematically the initial matrix of flows F into a symmetric component F+ which describe the sum of flows in both directions (Fij+Fji) and an asymmetric component F- which describe the difference between flows in both directions (Fij-Fji). The volume of relation is described by Tobler’s symmetric component of flows F+ and defines the global level of connexion between both territorial units, under the consideration that, whatever the direction, a flow create a non-oriented linkage. In our example the most important volume of relation is observed between France and Italy and the less important between Algeria and Libya. F+ij FRA ITA ESP ALG MAR LBY TUN Total FRA 0 55072 43963 4023 4855 764 3743 112420 ITA 55072 0 22398 2967 988 5246 2773 89444 ESP 43963 22398 0 2329 1705 1361 610 72367 ALG 4023 2967 2329 0 138 3 114 9573 MAR 4855 988 1705 138 0 165 93 7944 LBY 764 5246 1361 3 165 0 466 8005 TUN 3743 2773 610 114 93 466 0 7799 Total 112420 89444 72367 9573 7944 8005 7799 307550 The balance of relations is described by Tobler’s asymmetric component of flows F- and defines the gains and loses of a territorial unit in relation with another territorial unit. The matrix present symmetric values with opposite signs and create an oriented linkage. In our example, the most important differential in the commercial balance is observed between France and Spain, in favour of France (+4.9 Billions of dollars).

F- FRA ITA ESP ALG MAR LBY TUN Total FRA 0 180 4485 267 -211 -170 463 5014 ITA -180 0 3348 -1307 134 -3292 355 -942 ESP -4485 -3348 0 -1001 227 -1037 58 -9585 ALG -267 1307 1001 0 110 -1 44 2195 MAR 211 -134 -227 -110 0 49 13 -198 LBY 170 3292 1037 1 -49 0 16 4465 TUN -463 -355 -58 -44 -13 -16 0 -949 Total -5014 942 9585 -2195 198 -4465 949 0

The directional asymmetry of relations can be also described in relative terms by the index F-/F+ which is strictly comprise between -1 and +1. A negative value

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indicates that a territorial unit receive much more than he receives (as Morocco toward Algeria) and a positive value indicates the reverse situation (as Algeria toward Morocco). An index value equal or near to 0 indicates that the relations are more or less equal in both direction. The exchange between France and Spain which had the highest balance in previous analysis (±4.5 Billions of $) are in fact characterised by a low level of directional asymmetry (±0.10) as compare to the balance of exchanges between Morocco and Algeria which has a lower absolute value (±0.11 billions of $) but with a very high level of directional asymmetry (±0.76)

F+/F- FRA ITA ESP ALG MAR LBY TUN Total FRA 0.003 0.102 0.066 -0.043 -0.223 0.124 0.045 ITA -0.003 0.149 -0.441 0.136 -0.628 0.128 -0.011 ESP -0.102 -0.149 -0.430 0.133 -0.762 0.095 -0.132 ALG -0.066 0.441 0.430 0.797 -0.333 0.386 0.229 MAR 0.043 -0.136 -0.133 -0.797 0.297 0.140 -0.025 LBY 0.223 0.628 0.762 0.333 -0.297 0.034 0.558 TUN -0.124 -0.128 -0.095 -0.386 -0.140 -0.034 -0.122 Total -0.045 0.011 0.132 -0.229 0.025 -0.558 0.122 0.000

5.1.2 Relative level of flows and influence The analysis of flows in relative terms introduces a completely different type of analysis because the importance of flows is not evaluated from an external point of view but from the internal point of view of origins and destinations. The transformation which is applied consist in the division of each line (or column) of the matrix by the marginal sum. As an example, we will consider the analyse of the volume of relations between two states (F+) which is normally a symmetric linkage in absolute terms but which can produce very important asymmetry when it is analysed in relative terms. The structural asymmetry of relation is related to the difference of size (capacity of import and export of units) which is fundamental for the definition of influence areas. In our isolated system, Morocco account for 4% of France’s volume of trade which is mainly linked with Italy (47%) and Spain (41%). But in the same time, France account for 65% of Morocco’s trade relation which has also secondary important relations with Spain (19%) and Italy (11%). This asymmetry is not related to the direction of flows (we have taken the example of the matrix F+) but to the structural difference of size between the partners of the relation. This structural asymmetry introduces a relation of power and dependency between the territorial units. Indeed, in the case of a commercial conflict between the two partners of the relation, one of them will be much more

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vulnerable than the other (respectively 4% and 65% of the trade relation to be reoriented toward other partners).

codei FRA ITA ESP ALG MAR LBY TUN Total FRA 47% 41% 4% 4% 1% 4% 100% ITA 62% 29% 2% 1% 2% 4% 100% ESP 63% 30% 2% 3% 1% 1% 100% ALG 32% 36% 28% 2% 0% 1% 100% MAR 65% 11% 19% 0% 3% 1% 100% LBY 7% 68% 19% 0% 1% 4% 100% TUN 48% 35% 8% 1% 1% 7% 100%

The structural asymmetry of relations is strongly dependant from the spatial framework used for its computation. In previous example, we have neglected the relations between our isolated system and the rest of the World, which can produce false conclusions on the real level of dependency between the selected countries. For example, the structural influence of France on Tunisia is divided by 2 (48% to 27%) if we take into account the trade relations between Tunisia and the rest of the World. But we can notice that at the same time the small influence of Tunisia on France is divided by 5 (3.6% to 0.7%) because the northern Mediterranean countries like France are much more connected the rest of the World (70-80% of their trade relations) than the southern Mediterranean countries (40-60% of their trade relations).

codei FRA

ITA ESP ALG

MAR

LBY

TUN

Rest of the world

Total

FRA 0% 10% 8% 1% 1% 0% 1% 79% 100% ITA 13% 0% 5% 1% 0% 1% 1% 79% 100% ESP 19% 10% 0% 1% 1% 1% 0% 69% 100% ALG 17% 13% 10% 0% 1% 0% 0% 59% 100% MAR 28% 6% 10% 1% 0% 1% 1% 54% 100% LBY 5% 36% 9% 0% 1% 0% 3% 45% 100% TUN 27% 20% 4% 1% 1% 3% 0% 43% 100%

5.1.3 Other measures of flows intensity Measures of flows intensity can be produced by adding structural information out of the flow matrix. This topic is of special importance when the diagonal of the matrix of flows is not filled i.e. when the internal movement inside each territorial unit are not taken into account4. Many measures of flows intensity can be produced according to the nature of the flow and the assumption made by the

4 Many mistakes in the interpretation of flows are related to this problem of lack of information on the

internal moves of territorial units. For example, an analysis of international air flows can give the false impression that Europe plays a major role in air traffic at world scale, simply because the internal air traffic of United States is not taken into account

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observer of the relations. It is not possible to specify a general solution as it depends strongly on the type of flows which are analysed. For example the intensity of migratory flows can be divided by the population of territorial units (in- and out- migration rates) when the intensity of economic flows can be better related to the GDP of the territorial unit (dependency to external trends). Modelling of flows according to various assumptions on structural factor determining the relations between states are certainly the most important topic as its aim is to go behind the simple description of relations toward their explanation and their simulation. A classical solution is the family of the gravity model of spatial interaction which propose to explain the flow Fij between two territorial units i and j by structural factors characterizing the origins, the destination and the distance between origin and destination. Many other variables can be added, as it will discuss in the following part on the concept of structure and the linkage approach.

5.2 Preliminary sample of methods for structure analysis

As in the case of flows, we will not try here to define all possible methods which can be applied to the analysis of structures but it is important to give a first overview of the different interpretations and applications which can be derived from structural information in conceptual terms and how it can be linked to the analysis of flows. To illustrate this, we will analyse a very simple sample matrix of attributes of the previous sample of states from Northern and Southern Mediterranean. As in previous case, we consider for simplicity the 7 selected states as an isolated system.

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Table 5-2 : Structural characteristics of selected Mediterranean countries (1999)

Name SUP AGR POP BIR GNP GDP CO2 France 552 195 59.1 709 1550 1130 391 Italy 301 109 57.7 519 1160 1040 436 Spain 506 192 39.4 355 571 555 251 Algeria 2382 80 30.8 924 46 91 102 Libya 1760 21 5.0 140 10 24 44 Morocco 447 96 28.2 649 36 102 30 Tunisia 164 49 9.5 209 20 50 17 Total 6112 742 229.7 3505 3393 2992 1271 Definition of variables

SUP Area in 1999 (thousands of km2) AGR Agriculture area in 1999 (thousands of km2) POP Population in 1999 (millions of inh.) BIR Birth Rate in 1999 (thousands of

births)

GNP Gross National Product in 1999 (in billions of US $) GDP Gross Domestic Product in 1999 (in billions of US

$ p.p.a) CO2 Carbon Dioxide Emission in 1998 (millions of tons)

5.2.1 Size and hierarchy The hierarchy of sizes of territorial units is the first dimension to introduce in structural analysis, whatever the family of criteria under consideration (economic, demographic and environmental). Size is defined by raw count variables (“stocks” of population, area, GDP…) which can be added and transformed into a proportion or rank of the system which is analysed for better comparability. Sizes define the potential influence of a given element in the system under consideration and are directly related to their ability to establish flows with the other elements of the system (push and pull factors). The choice of the size criteria should be made very carefully and clearly related to the problem to be analysed. For example, if we are interested on agricultural matters, the potential of states should be evaluated by agricultural area (where France and Italy represent 52% of the total) and not simple area (where Algeria and Libya represent 68% of the total). When several criteria are considered to be important for the elaboration of a synthetic index of size is a very complicated question because it is related to the selection of variables, to their possible transformation (rank, proportions, standardised values, …) and to the methodology used for the elaboration of the synthesis (arithmetic mean, weighted mean, factorial analysis, …).

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For example, the size of Libya appears greater than the size of Tunisia when we use the methodology of the mean proportion on all criteria (because Libya has a very larger area) but the situation is reversed when we consider the mean rank on all criteria (because Tunisia has better ranks on most criteria).

Table 5-3 : Size as proportion of the whole system

Name SUP AGR POP BIR GNP GDP CO2 mean France 9% 26% 26% 20% 46% 38% 31% 28% Italy 5% 15% 25% 15% 34% 35% 34% 23% Spain 8% 26% 17% 10% 17% 19% 20% 17% Algeria 39% 11% 13% 26% 1% 3% 8% 15% Libya 29% 3% 2% 4% 0% 1% 3% 6% Morocco 7% 13% 12% 19% 1% 3% 2% 8% Tunisia 3% 7% 4% 6% 1% 2% 1% 3% Total 100% 100% 100% 100% 100% 100% 100% 100%

Table 5-4 : Size as rank of elementary spatial units

Name SUP AGR POP BIR GNP GDP CO2 mean France 3 1 1 2 1 1 2 1.6 Italy 6 3 2 4 2 2 1 2.9 Spain 4 2 3 5 3 3 3 3.3 Algeria 1 5 4 1 4 5 4 3.4 Libya 2 7 7 7 7 7 5 6.0 Morocco 5 4 5 3 5 4 6 4.6 Tunisia 7 6 6 6 6 6 7 6.3

It is of crucial importance to notice that size can not always been reduced to a single dimension when several criteria are taken into consideration. In many cases, it is necessary to consider size in a multidimensional way according to the groups of correlation between attributes defining the size of the units. In our example, the 1st factor of a Principal Component analysis define a global size of states on the criteria of Population, GDP, GNP, Agriculture area and CO2 emissions. But this factor account only for 68% of the initial information and a second factor define a secondary component of size which is rather related to birth rate and area of states and ads complements for 19% of the initial information. Typically, Algeria has a medium score on the first dimension but a very high level on the second one.

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Figure 5-1 : Size as multivariate dimension

Principal Component Analysis of Sizes (axes F1 et F2 : 88 %)

Tunisia

Morocco

Libya

Algeria

SpainItaly

France

SUP

AGRPOP

BIR

GNPGDPCO2

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

-1.5 -1 -0.5 0 0.5 1 1.5 2

- - axe F 1 (68 %) - ->

5.2.2 Dissimilarity and identity The analysis of similarities/dissimilarities between economic, social and environmental structures of the territorial units defines a second field of investigation where the attributes are not necessary related to size and will rather focus on the relative intensity of the factors, all things being equal with the size of the territorial units5. As an example, we will consider a set of variables which are ratio between initial variables describing the size of territorial units and where the initial size effect has been formally removed. The variables which have been selected in various fields normally result from the work of an expert which will choose the most relevant index, according to the phenomena under consideration and the political demand to be addressed. In our example, a specialist of demography can consider that simple population density (DEN1) is not sufficient because many states like Libya and Algeria has whole part of their territory with desert areas. Therefore, the expert could provide an additional index which is a proxy of net density based on the ratio between population and agricultural area (DEN2). The same is true in the case of economics where the expert can consider that two different measures of wealth per inhabitant introduce complementary information (ECO1, ECO2). And finally, the environmental expert can propose two different measures of the consumption of CO2 according to the fact that one focus on a social approach (ENV1) or an economic approach (ENV2) of the problem of pollution.

5 But it is not an absolute rule and, in certain cases, factors related to size and relative intensity of

phenomena can be combined together in the same analysis.

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Table 5-5 : Selected demographic, economic and environmental characteristic ratios

Name DEM1 DEM2 DEM3 ECO1 ECO2 ENV1 ENV2 France 107 303 12 26200 19100 6.6 0.35 Italy 192 529 9 20100 18000 7.6 0.42 Spain 78 205 9 14500 14100 6.4 0.45 Algeria 13 385 30 1500 3000 3.3 1.12 Libya 3 238 28 2000 4800 8.8 1.83 Morocco 63 294 23 1300 3600 1.1 0.29 Tunisia 58 194 22 2100 5300 1.8 0.34 West. Medit. 38 310 15 14800 13000 5.5 0.42 Definition of variables DEM1 Gross population density in inh/km2 (POP/SUP) DEM2 Net population density in inh/km2 (POP/AGR) DEM3 Birth rate (BIR/POP) ECO1 GNP in $ per inhabitant (GNP/POP) ECO2 GDP in p.p.a per inhabitant (GDP/POP) ENV1 CO2 in tons per inhabitant (CO2/POP) ENV2 CO2 in kg per $ of GDP (CO2/GDP)

As in the case of the analysis of size, it is possible to introduce many transformations in the initial table (rank, standardisation…) and we do not further develop the crucial importance of this step but insist on the fact that it can heavily modify the following results of the analysis. We would rather insist on the fact that they are two complementary ways for the analysis of such a table, according to the fact that the focus is made on the variables (correlation) or the territorial units (similarities). Each type of analysis produces different output which has different applications for political decision in the ESPON program. Correlation analysis focuses on the analysis of dependencies between variables describing the territorial units in order to propose more synthetic parameters like factors which summarise the initial formation in a more synthetic way. In the sample of data on Mediterranean countries it is possible to identify more or less trivial relations: it is obvious that the two measures of GDP/inhabitants are highly positively correlated (+0.99) and has a negative correlation with the birth rate (-0.86 and –0.92); but less trivial relations can be noticed as in the case of gross population density which is correlated with the previous variable which is not the case of net population density. The lack of significant relation between the environmental variables and the economic and demographic parameters is also interesting, even if it is partly related to the small size of the sample.

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DEM1 DEM2 DEM3 ECO1 ECO2 ENV1 ENV2 DEM1 1 0.618 -0.841 0.765 0.815 0.251 -0.643 DEM2 0.618 1 -0.212 0.353 0.349 0.209 -0.085 DEM3 -0.841 -0.212 1 -0.864 -0.919 -0.376 0.641 ECO1 0.765 0.353 -0.864 1 0.986 0.540 -0.438 ECO2 0.815 0.349 -0.919 0.986 1 0.573 -0.448 ENV1 0.251 0.209 -0.376 0.540 0.573 1 0.452 ENV2 -0.643 -0.085 0.641 -0.438 -0.448 0.452 1 in black, values significant at level alpha=0.05 (bilateral test)

As in the previous case of the analysis of the size variables, the factorial analysis is very helpful for summarizing the correlation matrix in order to propose more global factors of spatial differentiation. In our example, a first factor is defined by the combination of economic and demographic variables with a clear opposition between northern and southern Mediterranean countries. But the environmental dimension (emissions of CO2 per inhabitants or $) reveals another opposition between southern Mediterranean countries with an economy based on oil resources (Libya, Algeria) and countries with a different industrial basis (Tunisia, Morocco).

Figure 5-2 : principle component analysis of economic, social and environmental dimendations

Principle component analysis of economic, social end environmental dimensions (axes F1 et F2 : 84 %)

FranceItaly

Spain

Algeria

Libya

MoroccoTunisia

DEM 1

DEM 2DEM 3

ECO1

ECO2

ENV1ENV2

-1.5

-1

-0.5

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-1.5 -1 -0.5 0 0.5 1 1.5 2

- - axe F 1 (62 %) - ->

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Similarity analysis focus on the differences between state which can be expressed by a typology (cluster analysis) but can also provide a very previous information on linkage between states through the elaboration of a similarity matrix between states which can be directly connected to other linkage matrixes, as we will see in next section. In our example, the dissimilarity matrix6 reveals a very strong pattern of opposition between two groups of states located in North and South of the Mediterranean See. But they are some exceptions, like in the case of Spain which has a higher level of dissimilarity with Italy (3.68) than with Morocco (3.43) or Tunisia (2.97). Libya is also very different from Morocco (4.20) and Tunisia (3.96) but difference are also very strong with northern countries. The related classification tree7 confirms the strong opposition between the two groups of states and introduces some minor differences inside northern group (Italy / France & Spain) and southern group (Algeria & Libya / Morocco and Tunisia).

Table 5-6 : Dissimilarity matrix

Frau Ita Spa Alg Lib Mor Tun France 0.00 2.66 1.81 4.89 5.15 4.30 4.10 Italy 2.66 0.00 3.66 5.52 6.12 5.14 5.35 Spain 1.81 3.66 0.00 4.22 4.25 3.43 2.97

Algeria 4.89 5.52 4.22 0.00 2.76 2.28 2.67 Libya 5.15 6.12 4.25 2.76 0.00 4.20 3.96

Morocco 4.30 5.14 3.43 2.28 4.20 0.00 1.00 Tunisia 4.10 5.35 2.97 2.67 3.96 1.00 0.00

Figure 5-3 : Classification tree

6 Based on the classical Euclidean distance between standardised variables. 7 Based on Ward’s criteria applied to Euclidean distance between standardised values

0.00

5.00

10.00

15.00

20.00

25.00

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Italy

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ce

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a

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Dendrogramme

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5.2.3 Differences and complementarity The analysis of differences (or gradient) is statistically very near from the previous topic of dissimilarities but is conceptually very different because it introduces an asymmetric dimension in the analysis of the structural relations between states. As we have seen before, the dissimilarity is a symmetric linkage where the value which describe the link between 2 territorial units i and j is equal to the value which define the link between j and i. In the case of differences, the relation is asymmetric and the relation between i and j is the opposite (or the inverse) of the relation between j and i. This crucial difference can be explained through the simple example of the differences of GNP/inhabitants between the sample of Mediterranean countries. The absolute differences can be measure in a very simple way as the arithmetic difference between the territorial units. For this criteria, the difference of GNP/inh between France and Italy (±6100 $/inh.) is considered as much more important than the difference between Tunisia and Algeria (±600 $/inh ).

Xi-Xj Fra Ita Spa Alg Lib Mor Tun France 0 6100 11700 24700 24200 24900 24100 Italy -6100 0 5600 18600 18100 18800 18000 Spain -11700 -5600 0 13000 12500 13200 12400 Algeria -24700 -18600-13000 0 -500 200 -600 Libya -24200 -18100-12500 500 0 700 -100 Morocco -24900 -18800-13200 -200 -700 0 -800 Tunisia -24100 -18000-12400 600 100 800 0

The relative differences take into account the relative level of GNP/inh. or the couple of state and can be measure in a very simple way as the ratio of the value of the indicator for each couple of territorial units. For this criteria, the difference of GNP/inh between France and Italy (1.3.) is considered as much more important than the difference between Tunisia and Algeria (±600 $/inh). Whatever their method of evaluation, matrix of differences are a crucial structural component for the analysis of flows because they define opportunities of relation related to the concept of complementarity. It is conceptually very different from the matrix of dissimilarities which can also have an effect on flows but are rather related to the concept of identity. 5.2.4 Spatial proximity: geographical neighbourhood and network

accessibility The various measure of spatial proximity can also be considered as structure as far as they determine in several ways the possibility of flows between territorial

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units according to time or cost of relation. It is not the place to develop in detail the various measure of spatial proximity which can be introduced in the analysis of the position of Europe in the World but it is important to make a clear distinction between two very different forms of structural links according to the fact that they define a continuous (geographical neighbourhood) or discontinuous (network accessibility) approach of space. Geographical neighbourhood can be defined as information which is mainly related to the geometry of spatial units and based on the existence of common borders (contiguity) or the physical distance in kilometres between various points of the area of each territorial unit. The geographic definition of European neighbours under geographical criteria is not trivial as it can be seen on the example proposed in figure 5-4. If we use a map with a low level of spatial resolution –indicating only the main area without small islands or territories located out of the main territorial body of each state – we will eliminate many case of contiguity between territorial units. For example the common border between Spain and Morocco through Ceuta and Melilla or the common border between Russia and Poland or Lithuania through the district of Kaliningrad. In certain cases, the question is not only technical but also political as in the case of the definition of contiguity between Cyprus and Turkey which would be, de facto, recognition of the occupation of the northern part of the island… The existence of a common border between two states is a very fundamental topic for many types of flows (e.g. juridical consequence of unofficial migrations toward the territories of Ceuta and Melilla) but it is also very symbolic information which modifies the representations of people and policymakers. We have limited here our example to the case of the pan-European area but it is obvious that the question should be analysed in a world wide perspective in ESPON 341 because many states of Europe (in particular France and UK) has remote territories which create geographical neighbourhood between EU and many other continents (e.g. contiguity between France and south American countries through the French department of Guyana).

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Figure 5-4 : Common border between states in pan-European area

The question of the definition of contiguities has also important consequences on the cartography of structure. If we decide, for example, to produce a map of relative discontinuities of GNP/inh. at international level (Figure 5-5) we will produce a map where important discontinuities can be pointed in central and eastern part of Europe (e.g. between Finland and Russia) but we will not provide any information on the discontinuities which exist between northern and southern coast of the Mediterranean See and are of comparable importance, as we have seen in the previous section. We will neither sea the discontinuities of wealth between European Union and the Balkan countries, despite the high level of flows which are related to this structure (e.g. migrations between Albania and Italy).

Figure 5-5 : Discontinuities of GNP/inh. between states along terrestrial borders

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In this situation it is of utmost importance to propose other measures of geographical proximity, based for example on the minimum distance between the borders of states separated by sea and to consider that the neighbourhood exist if the minimum distance is lower than a given threshold (e.g. 50 or 100 km) and if the sea can be crossed easily. But we see that, in this situation, the geographical neighbourhood is not based only on geometry and take into account other information on the possibility for migratory flows to cross channels which mean that we are in fact introducing a proxy of the concept of network accessibility. Network accessibility is not based on a hypothetical effect of physical distance but introduce explicit assumptions on the technical or practical solutions which contribute to the realisation of flows between territories. According to the nature of flows which are considered of interest, various form of network accessibility can be defined related for example to different modes of transportation (air, rail, road…) and their possible connexion in multimodal networks. In the framework of the limited budget of ESPON project 3.4.1, it will probably not be possible to analyse this point in too much details but it is important to keep in mind that network accessibility does not exist without consideration of the flows which can be related to a particular infrastructure of communication. It is also of utmost importance to introduce a social dimension in the measure of network accessibility because all types of networks can not be used by all social groups according to their resource or knowledge (e.g. internet). From conceptual point of view, network accessibility is fundamentally different from geographical neighbourhood because it is often related to connexion between nodes which are located in a discontinuous space (e.g. gateway cities). It is related to difficult questions concerning the scale of analysis, the basic territorial units of the study. Indeed, the fact that a state has a good airport connexion in a given point of his territory does not mean that all other parts of the territory of this state can benefit from this infrastructure, depending on internal networks which connect secondary centres to the main Hub. Reversely, a State which does not have a good airport on his own territory can benefit from the infrastructure of other neighbouring states, at less in the border area. Geographical neighbourhood and network accessibility are complementary structure which should both be taken into account if we want to get a sound interpretation of flows between Europe and the rest of the World

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5.3 Preliminary sample of methods for synthetic analysis

We will now briefly explain how the various types of synthesis can be made, without going in too many details. 5.3.1 Thematic synthesis Thematic synthesis on a particular field will be based on the use of models who integrates flows and structure in a systemic way. As a very simple example, we will illustrate the methodology of gravity model of spatial interaction applied to the economic exchanges between northern and southern Mediterranean states which has been previously analysed. We propose to estimate the trade flows (Fij) between two states as a function of the economic capacity described by the GNP of the country of origin (GNPi) and the GNP of the country of destination (GNPj). We introduce also an assumption on the role of geographical distance (Dij) and geographical neighbourhood described by the presence of a common border (Cij). The structure of the model is a classical gravity assumption that:

Fij = α. (GNPi) β1. (GNPj) β2. (Dij)γ . δ(Cij)

The parameters are estimated by linear regression after logarithmic transformation:

Log(Fij) = a0 + a1.log(GNPi) +a2 log (GNPj) + a3 log(Dij) + a4.Cij => With α= exp(a0) ; β1=a1 ; β2=a2 ; γ=a3 ; δ=exp(a4)

The analysis of the results of multiple regression indicates that both push and pull factors (GNPi and GNPj) has significant positive effect on the level of trade flows between partner state but not the geographical distance (Dij) and the geographical neighbourhood (Cij) which do not appears to have a significant influence of trade flows between the set of countries which has been selected. The value of geographical parameter indicate that the presence of a common border has a slow positive effect on trade flows (+36%) but it is not significant has it is not a regular result. More surprisingly, distance appears to have a small positive effect, which means that trade increase when distance increases, which is very unusual but can be explained by the relative homogeneity of distance and the fact that we have use a very rough definition of proximity (Euclidean distance

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between geometrical centres of states). As we will see later, this contradiction is related to a bad specification of distance. The proposed model explains 72% of the variation of flows between states but let unexplained 28% of the initial information on trade flows. The analysis of the residuals of the model is therefore a very interesting way for the discovery of other explanatory variables which has been introduced in the initial formulation of the model. Absolute residuals are computed as the difference between observed and predicted flows and relative residuals as the ratio between observed and predicted flows (see. below)

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Table 5-7 : Observed trade flows

Fij FRA ITA ESP ALG MAR LBY TUN Total FRA 27626 24224 2145 2322 297 2103 58717 ITA 27446 12873 830 561 977 1564 44251 ESP 19739 9525 664 966 162 334 31390 ALG 1878 2137 1665 124 1 79 5884 MAR 2533 427 739 14 107 53 3873 LBY 467 4269 1199 2 58 241 6236 TUN 1640 1209 276 35 40 225 3425 Total 53703 45193 40976 3690 4071 1769 4374 153776

Table 5-8 : Expected trade flows

F*ij FRA ITA ESP ALG MAR LBY TUN Total FRA 36728 20346 1479 431 1255 725 60964 ITA 37274 8682 1173 355 956 546 48986 ESP 21409 9001 666 379 589 338 32382 ALG 1769 1383 757 57 83 98 4147 MAR 558 452 465 62 28 17 1582 LBY 1520 1141 678 84 26 83 3532 TUN 905 672 401 102 16 86 2182 Total 63435 49377 31329 3566 1264 2997 1807 153775

Table 5-9 : Absolute residuals (Fij – F*ij)

F*ij FRA ITA ESP ALG MAR LBY TUN Total FRA -9102 3878 666 1891 -958 1378 -2247 ITA -9828 4191 -343 206 21 1018 -4735 ESP -1670 524 -2 587 -427 -4 -992 ALG 109 754 908 67 -82 -19 1737 MAR 1975 -25 274 -48 79 36 2291 LBY -1053 3128 521 -82 32 158 2704 TUN 735 537 -125 -67 24 139 1243 Total -9732 -4184 9647 124 2807 -1228 2567 0

Table 5-10 : Relative residuals (Fij/F*ij)

Fij FRA ITA ESP ALG MAR LBY TUN Total FRA 0.75 1.19 1.45 5.39 0.24 2.90 0.96 ITA 0.74 1.48 0.71 1.58 1.02 2.86 0.90 ESP 0.92 1.06 1.00 2.55 0.28 0.99 0.97 ALG 1.06 1.55 2.20 2.18 0.01 0.81 1.42 MAR 4.54 0.94 1.59 0.23 3.82 3.12 2.45 LBY 0.31 3.74 1.77 0.02 2.23 2.90 1.77 TUN 1.81 1.80 0.69 0.34 2.50 2.62 1.57 Total 0.85 0.92 1.31 1.03 3.22 0.59 2.42 1.00

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The analysis of the margin of the matrix of residual indicates firstly that some states are more involved in the trade of the area than other. For example, we can notice that northern Mediterranean countries export less than expected with other countries selected when southern countries export much more than expected. The situation is not exactly the same for importation where we can notice exception to the previous rule (Spain, Libya). The analysis of the internal part of the matrix of residuals reveals specific linkages between couples of states which have significant positive or negative residuals, indicating preferences or barriers effects according to the variables introduced in the model. For example, if we focus on north-south trade relations, we can observe that France has significant positive residuals in both directions with Morocco, Tunisia and at a less degree Algeria (only for exportation) but negative residuals with Libya. Italy has significant positive residuals in both direction with Tunisia and at a less degree with Libya and Algeria (only for importation) and Morocco (only for exportation). Spain has positive residuals with Morocco in both directions and at a less degree with Algeria and Libya (only for importations). The analysis of residuals suggest very clearly missing variables in the model like historical heritage related to colonisation (France with Maghreb and Italia with Libya) or common language (France and Maghreb). It can also reveals some misspecification in the parameter introduced in the model like geographical distance which has been measured as distance between gravity centre of area but would be better described by minimum distance between external borders (explaining therefore the intensity of relations between Italy and Tunisia or Spain and Morocco). This example indicate clearly how the step of joint modelling of flows and structure help to discover hidden factors and suggest connexion with other thematic fields of interest for a better estimation of the model which can be improved and calibrated in a hypothetico-deductive process. 5.3.2 Structural synthesis This point will not be developed as most methods for joint analysis of several thematic structures are similar to the methods which have been presented for the analysis of a single structure (see. B.2). Multivariate analysis (factorial analysis, classification, similarity, discontinuity can be either applied to a homogeneous table of economic variables or to a table combining social, economical, demographical and environmental data.

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The only point to precise is the mathematical type of variables introduced in the analysis (quantitative, qualitative, ordinal…) because it can modify the choice of the most relevant statistical tools to be applied to structural analysis. For example, if we want to analyse the correlation between the qualitative variable “Belonging to EU” and other quantitative variables we will not use classical correlation or regression model but variance analysis. For example, the variance analysis indicates clearly the existence of a very significant opposition between and northern and southern Mediterranean countries on the criteria of economic development measured by GNP/inh (90% of variance explained, significant at level 0.001). But this opposition is not systematic and, for example, it is not possible to define a significant north-south opposition on the criteria of ecological efficiency measured by CO2 per $ of GNP (20% of variance explained, non statistically significant). In this case, the real opposition is rather between countries with oil production (Libya, Algeria) with emission of CO2 per $ and all other countries of the area.

Table 5-11 : Relation between economic development (GNP/inh.) and belonging to EU.

Source ddl SSQ Mean Square

F - Fisher Pr > F

Model 1.000 589360119 589360119 42.748 0.001 Residual 5.000 68934167 13786833

Total 6.000 658294286 r2 = 90%

Table 5-12 : Relation between Ecological efficiency (CO2/GNP) and belonging to EU.

Source ddl SSQ Mean Square

F - Fisher Pr > F

Model 1.000 0.409 0.409 1.274 0.310 Residual 5.000 1.604 0.321

Total 6.000 2.013 r2 = 20%

Many ideas for structural synthesis are related to the research on synthetic indexes of human or sustainable development which are actually analysed in ESPON 3.2 in the work packages related to the construction of a European Territorial Cohesion Index. Therefore, the TPG ESPON 3.4.1 will take benefit from this existing material in order to gain complementarity between the different parts of the whole ESPON program. 5.3.3 Flows synthesis As it was explained in part B.1, the various type of flows are not independent from each other and correlation or causal relation can be established between

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various types of flows which link states together. The synthesis of various types of flows is not necessary difficult if the methodology used by the different partners in charge of the various thematic flows is made similar and coherent at the very beginning. As they are many solutions for the transformation of initial matrix of flows (see B.1), it is crucial to introduce common methodology and common indexes in all work packages, even if some adding methodologies and variables should be applied on particular types of flows (like air connexion). It is obvious that the elaboration of a cross-thematic database of flows, which is a main concern of project ESPON 3.4.1. will introduce a sensible reduction of the initial information because, for example, the territorial units available in each matrix of flows will not be exactly the same and because the elaboration of a common territorial breakdowns will oblige to reduce the spatial resolution of the analysis. As an example, the analysis of air connexions should normally be realised at city or airport level in a first step, but data will be further aggregated at national level in order to be combined with economic or migratory flows which can not be obtained at city level. The same problem will appear in the case of introduction of an historical dimension in the analysis of a given type of flow. As limits of states are changing through time and that many states has been broken in several others after 1989 (Soviet Union, Yugoslavia, Czechoslovakia…) it will not be possible to introduce any historical dimension in the analysis of flows without geographical aggregation of territorial units. In certain cases, it is possible to try a reconstitution of past flows in new borders but is very expensive and impossible as regard to the limited resources available in ESPON 3.4.1. In certain cases, it is only between very big aggregates of world region that it is possible to proceed to such evaluation of flows through time. In many cases, due to lack of information (holes in matrixes of flows) and difficulty to harmonise various types of criteria, will we limit our synthesis to the comparison of qualitative variables indicating if flows are, for example “High”, “Medium” or “Low”. Those typologies introduce a dramatic reduction of initial information but are probably the most efficient solution for cross-thematic synthesis of flows in the context of our project. In our Mediterranean example, we have seen that it was relatively easy to distinguish three levels of trade flows, because of strong discontinuities in the statistical distribution8. According to the level of bilateral commercial exchanges (Trade), we can associate to each couple of origin and destination a qualitative

8 Many statistical methods like Jenk’s algorithm can help in the objective determination of typologies of

quantitative variables, but it is also important to take into account the expert advices on each subject.

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value according to level of flows. We do the same for two other matrixes of flows describing the number of air passengers between states (Air1) and the number of couples of cities connected by a minimum number of passengers (Air2)9. As variables are strongly correlated, it is relatively easy to define a global synthesis, except in particular case where we can observe a heterogeneous combination of high and low flows (e.g. France and Libya with low level of commercial trade but high level of air connexions).

Table 5-13 : Synthesis of three types of flows between Mediterranean countries

Origin/Dest. Quantitative flows

Qualitative flows Flows

I j Trade Air1 Air2 Trade Air1 Air2 Synthesis FRA ITA 55072 5494041 284 3 3 3 3 FRA ESP 43963 5052059 288 3 3 3 3 FRA ALG 4023 1448096 42 2 3 3 3 FRA MAR 4855 3144 4 2 1 2 2 FRA LBY 764 2121522 79 1 3 3 2* FRA TUN 3743 2656246 67 2 3 3 3 ITA FRA 55072 5494041 284 3 3 3 3 … … … … … … … … … … … … … … … … … … LBY TUN 466 53002 2 1 1 1 1 TUN FRA 3743 2656246 67 2 3 3 3 TUN ITA 2773 105502 10 2 2 2 2 TUN ESP 610 213556 24 1 2 2 2 TUN ALG 114 0 0 1 1 1 1 TUN MAR 93 0 0 1 1 1 1 TUN LBY 466 53002 2 1 1 1 1

Trade = bilateral commercial flows; Air1 = number of passengers; Air2 = number of city connexions 3 = Main flows; 2= Medium Flows; 1 = Small Flows; * indicate a mixture of high and low flows. Qualitative transformation is based on statistical discontinuities in the distribution of each type of flow It is now easy to propose a synthetic analysis of flows between Mediterranean countries which can be represent in matrix or graphic form.

9 Notice that the introduction of this variable help to limit the lose of information introduced by the

aggregation of flows between airport at state level.

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Figure 5-6 : Synthesis of air and trade flows between selected western Mediterranean countries

nt. FR

A ITA

ESP

ALG

MAR

LBY

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Total

FRA 3 3 3 2 2 3 16 ITA 3 3 2 1 2 2 13 ESP 3 3 2 1 2 2 13 ALG 3 2 2 1 1 1 10 MAR 2 1 1 1 1 1 7 LBY 2 2 2 1 1 1 9 TUN 3 2 2 1 1 1 10 Total 16 13 13 10 7 9 10 78

The synthetic pattern of flows which is derived from the synthesis demonstrate clearly a high level of integration between northern Mediterranean countries which are connected by high level of flows on all criteria and, reversely, the lack of integration between southern Mediterranean countries which has always low level of flows in their relation to each other. Concerning north-south relations, the major role is played by France which has high level of flows with Algeria and Tunisia and medium level of flows with Morocco and Libya. Italy and Spain has a medium level of relation with all southern Mediterranean countries, except Morocco which appears as the less connected to the rest of the area for the selected criteria of flows (trade and air connexions). Those results are not surprising but they illustrate the way we propose to deliver relatively simple and synthetic messages, useful for political decisions.

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6 DICTIONNAIRE OF CONCEPTS

6.1 Integration Zones

The geographical integration is a process by which places become clearly linked with other ones and eventually become interdependent. They can constitute a new space or a new territory. The integration can involve either equally or unequally developed territories. The places constituting that new territory become then distinct from other places, with which they constituted before another geographical unit. One has to distinguish between spatial integration and territorial integration and take into account the different levels at which the process occurs. In the case of spatial integration, places are connected by functional economical, demographical, informational, cultural links eventually without any institutional support. This kind of integration involves contiguous portions of space belonging to different countries. What P. Mehlbye (2000) defined as European Global Integration Zones (GIZs) can be included in this first definition. The GIZs are clusters of metropolitan urban areas linked by strategic cooperation programs. This kind of zone offers “high quality global economic functions and services, which enable a high-income level and a well-developed infrastructure”. The core area is characterized by “a more dense and dynamic territorial structure both in term of its node (metropolitan regions, cities and towns) and links (external and internal communication network)”. Nevertheless, the process of integration is not necessarily based on voluntary programs of cooperation in such domains as policy, spatial planning, regional development, economics, etc… The territorial integration implies several countries in a project set up in order to face the process of globalisation. This process can be understood as the gradual integration of all societies in the highest geographical level: the World. In order to face globalization which is more or less perceived as a constraint, the necessity to reach the relevant size (that of United States or China) encourages numerous countries to be part of regional integration zones. This project can be based on an institutional basis for which European Union is seen as a model. In such case, the idea of a common belonging or future is promoted. However, EU integration zone, in which the different member states become step by step economically interdependent, remains an exception. The process of integration can also be based on lighter ties and fewer cooperation programs, involving only a few domains, economic and financial for instance, like trade agreements or customs unions (Viner, 1950). There are also connexions between the general concept of integration zone and that of optimal monetary or commercial zone, first defined by economists among which Mundell (Mundell, 1961 & 1969). Optimal monetary zones are large, and eventually multinational, groupings of territories. They are homogeneous enough

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to allow the mobility of the factors of production at a reasonable cost (money and labour force for instance), economies of scale, implementation of well balanced public policies and finally good governance. The process of integration which gives way to the emergence of integration zones has evident connexions with the process of regionalization because each integration zone, spontaneous or politically planned, whatever its size is, is always a subset of a wider ensemble (see Regionalization). References

• List, F., 1966, The National System of Political Economy, New York, Kelley. • Mehlbye, P., 2000, “Global Integration Zones – Neighbouring Metropolitan

Regions in Metropolitan Clusters”, Informationen zur Raumentwicklung, vol 11.

• Mundell, R., 1961, “A theory of optimum currency areas”, American Economic review, n°51.

• MUNDELL R., 1969, Monetary problems of the international economy, Conference on International Monetary Problems, University of Chicago, University of Chicago Press.

• Rollet, P., 1987, Spécialisation internationale et économie européenne, Paris, Economica.

• Siroën, J.M., 2000, La régionalisation de l’économie mondiale, Paris, La Découverte.

• VINER J., 1950, The Customs Union Issue, London, Carnegie Endowment for International Peace.

6.2 Centre / Periphery The geometrical metaphor of the centre and the periphery is often used in order to describe the opposition between two basic types of places in a spatial system in the frame of hierarchical and dissymmetrical relations. In this spatial system, the centre benefits from peripheral zone and controls it; the peripheries are subjected to the centre. This conceptual couple has been lasting since at least Werner Sombart (1909), if not since Marx, and has been used by the theoreticians of the imperialism (Luxemburg, 1972; Boukharine, 1977). The economists who work on the development disparities gave it its current meaning (Samin Amin, 1973). Alain Reynaud (1988) extended the use of the notion to the field of geography. According to him, the centre is a place of concentration of population, wealth, information, innovation capacity and decision power and the periphery is the contrary. The concept can be applied to all geographical levels (village, town and region). However it has been mainly used at the global level as an equivalent to developed/developing worlds or North/South. The couple centre/periphery allows

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to describe the opposition between two spaces but above all it suggests an explanation of this differentiation: the periphery is dominated because the centre dominates. As a consequence, this concept has been mainly used in third-worldism thoughts more or less as a way to give bad conscience to the people of western countries. This usage is very restrictive and the concept is more efficient. Indeed asymmetric relations do not necessarily mean that the centre exploits the periphery. To think about centre and peripheries makes possible thoughts about the interaction between places in the World: mutual dependence links in which the disparities are the norm. Without relation between those two kinds of spaces, and therefore flows (of people, goods, capitals, information, decisions) the couple has no meaning. But more, the relations have to be asymmetric (unbalanced flows, power relations hierarchy). The centre is central only because it benefits from this difference and peripheries undergo a deficit that maintains its dominated situation. This system is thus self-regulated: the centre reproduces the conditions for its centrality. Because it is based on unbalanced exchanges, the system is dynamic. If some peripheries can become blind spots (they are then so called neglected) others can benefit from their situation: interface with places located outside the spatial system, final comparative advantages that are in line with the principle of international division of labour. That can lead to polarity inversion within the same scheme or to changes of system. The possibilities for action toward changing the position of peripheries involve of work of continuous positioning inside different networks and creation of new networks (Castells, 2001). The centre/periphery model has therefore a strong heuristic capacity if it is not too much simplified. The model is not obviously dual: in theoretical level the semi-periphery has already existed, but in the empirical research some other categories can appear: core area, dynamic side, inner periphery and external periphery. To overpass the schematic representation of domination of peripheries by centres it can be useful to introduce the concept of urban or metropolitan archipelago (Veltz, 2005). References:

• SOMBART W., 1909, Die deutsche Volkswirtschaft im neunzehnten Jahrhundert,

Berlin, G. Bondi. • LUXEMBURG R., 1972, L'accumulation du capital. Contribution à l'explication

économique de l'impérialisme, volumes 1 et 2, Paris, Maspero. • BOUKHARINE N., 1977, L'impérialisme et l'accumulation du capital, Paris,

Études et documentation internationales. • SAMIR A., 1973, Le Développement inégal, Éditions de Minuit.

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• REYNAUD A., 1988, Analyse régionale : application du modèle centre et périphérie, Travaux de l'Institut de géographie de Reims, n°75/76, Reims.

• CASTELS M., 2001, L'ère de l'information, La société en réseaux, Paris, Fayard.

• VELTZ P., 2005, Mondialisation, villes et territoires : l'économie d'archipel, Paris, Presses universitaires de France.

6.3 Regionalisation

A region is a subset of a geographical entity whatever its scale is. Using the word “region” is always done with a scalar perspective: the upper level is implied. For classical geography as for French administrative terminology a region is the first level of subdivision of the national territory (as the Lander in Germany). Today the word “region” is frequently used to refer to parts of the World grouping together several countries. The regionalisation is therefore the subdivision, spontaneous or intentional, of a geographical entity. Part of the debate on the impacts of Europeanization uses the term “regionalisation” in reference to processes of subdivision of the national state into regional sub-authorities. These processes manifest themselves into the (partial) decentralisation of national governments functions to the regions and to the increasing demand for more regional autonomy of self-government. In European states where the regional level (institutional, geographical or cultural) was not defined, there is an arbitrary definition of “paper regions” which are often an artificial set up for the purpose of finding a suitable institutional level for the targeting of EU structural aids. The latter phenomenon is particularly evident in the new member states (Poland, Slovenia) and in some older ones as well (Portugal). The implication of this subdivision is the “coming to life” of new actors and therefore of new powers in the decisional and implementation networks of important European policies, a structural change whose implications are still undefined. The economic literature uses the word “regionalisation” in an original meaning referring more to grouping than to division. It was already the case in the French political vocabulary, where “regionalisation” referred to the grouping of departments in a wider set that could remind the former provinces. Nowadays, “regionalisation” refers to the voluntary construction of a supranational and sub-global entity by contiguous countries. The European Union construction is the archetype of this process. The subdivision of the World justifies the use of this word. However that should not hide the fact that a non negligible number of World countries are not concerned by any regionalisation or are very weakly involved. That makes any thought on world “region” difficult. If some subset can

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be clearly identified (for example large States and their peripheries like USA or China, or advanced regionalisation construction like European Union), for the rest of the World every thing is confusing. According this viewpoint, it is not that obvious to consider the regionalisation as a functional subset of the globalisation process. That would imply that the world system needs large subdivision and not an anomy of isolated countries nor the coexistence of large and small groups and nor badly structured places. With such a viewpoint the regionalisation of some part of the world appears as an effort of construction of concurrent poles, even if their hierarchy is strong, in a polycentric world where a large part of the humankind is still in the periphery. Theoretical debates about regionalization. In the field of economic research, several theories have been proposed about the process of integration since the works of F. List. According to him, the formation of a common economic territory (such as the Zollverein) was the best way to protect recent industries. The classical and neoclassical approaches are market based theories: then, the process of regional integration is criticized because it hampers the development multilateral free-trade. According to other economic theories, regional protectionism is considered as a highly relevant solution for small and large countries in the context of increasing competition between firms of all countries. The commercial integration may provide many advantages. For example, Mundell showed that a process of integration involving poor countries can enhance the mobility of capital towards them (Mundell, 1968). The inward flow of investments in these countries makes possible the convergence of capital endowments between small and large countries. The formation of a customs union by small and poor countries is then a relevant solution to create the conditions of a greater competitiveness at the international level. In a static approach, other economists have proposed various theories about the customs unions (Viner, 1950; Tinbergen, 1954; Meade, 1955; Scitovsky, 1958). These unions mean that a group of countries decide to turn down every barrier and obstacle in order to support the trade flows between them. In the same time, they establish a common external tariff for their imports. Therefore, a customs union can have two possible effects: - the replacement of imports previously coming from non member countries by an internal flow coming from a member country of the union, even if this internal flow is more costly (trade diverting). - a production made in a member country can be replaced by a new one, made by another member state of the union but less costly. In a more dynamic approach, some economists emphasize the idea that a customs union is likely to affect the conditions of the economic growth. They underline the following effects of the establishment of such unions: creation of economies of scales (the productivity increases and the production costs

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decrease, see Krugman, 1995); increase of the competition between firms of member countries (diminution of prices); diminution transaction costs (market extension)… Another subject of discussion about the process and the forms of regionalization is its connections with that of globalization. The question is then: multilateralism versus regionalization? Or multilateralism going along with regionalization? Economists usually think that multilateralism (i.e. the extension of the most favoured nation status to every country in the world) is the best way to increase the level of well being at the global level. But this idea is relevant only in the context of a “concurrence parfaite” on a totally transparent market, which is actually not the case (trade barriers, fluctuation of exchange rates…). In this frame, economists have discussion about the following topics: does the increase of intraregional trade cause a decrease of interregional trade flows? Can the formation of a regional market have any consequence on the level of well being of non member countries (Viner, 1950)? To the second question at least, it is hard to give any definitive answer: to have a clear idea of the effects of regionalization on the rest of the World, one must be able to identify many variables. But some economists, such as P. Krugman, have tried to estimate the number of market zones which would make the level of well being of the World decrease (Krugman, 1991). These debates are based on the idea that these unions are politically planned. But, in some cases, the process of regionalization is more spontaneous and is not based on any external common tariff barrier (Eastern Asia). The effects of such process may be different. References:

• Krugman, P., 1991, “The move toward free trade zones”, Federal Reserve of Kansas City Econpmic Review, 1991.

• Krugman, P., Obstfeld, M., Economie internationale, Bruxelles, De Boeck. • List, F., 1966, The National System of Political Economy, New York, Kelley. • Meade, 1955, The Theory of Customs Unions, Amsterdam, New Holland

Pub Co. • Mundell, R., Swoboda, A., 1970, Monetary Problems of the International

Economy, Chicago, London, University of Chicago Press. • Mundell, R., 1961, “A theory of optimum currency areas”, American

Economic review, n°51. • Scitovsky, T., 1958, Economic Theory and Western European Integration,

G. Allen and Unwin. • Tinbergen, J., 1954, International Economic Integration, Amsterdam,

Elsevier. • Tinbergen, J., 1954, Customs Unions: Influence of Their Size on Their

Effects. • Viner, J., 1950, The Customs Union Issue, New York, Carnegie Foundation

for International Peace.

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• Frankel, J.A. (ed), 1998, The Regionalization of the World Economy, NBER, University of Chicago Press.

• Fouquin, M., 1993, “Le développement du régionalisme commercial”, La Lettre du CEPII, Novembre, released in Problèmes Économiques, 2. 366, March 1994, pp. 29-32, p. 29.

6.4 Polycentrism

“Polycentricity” is used as a self-explanatory concept, characterising something that is opposite to monocentricity on the one hand and dispersal and sprawl on the other. It is supposed to contribute to balanced regional development, European competitiveness and sustainable development, and to facilitate new urban-rural partnerships. Two structural aspects are of particular relevance to polycentricity. The morphological aspect. The urban pattern may be either strongly or weakly hierarchical. Two extreme patterns can be identified: Mono-nuclear pattern where dominant city and several peripheral/dependant cities or poly-nuclear pattern where cities are quite similar in size and where there is no dominant city. The relational aspect. Polycentricity is based on the networks of flows and co-operation between urban areas at different scales that may be oriented in different ways between centres. Two extreme patterns can be identified. Mono-oriented relations are preferentially oriented towards one centre whereas multi-directional relations have no obvious orientation. The development of synergies of cities implies the development of significant mutual connections between cities, and not just linking up with a main node. Accordingly, a mono-oriented relational pattern is therefore incompatible with polycentricity. Thus, in general it is supposed that polycentric urban relations are most likely to develop in systems of even-sized cities that could see an opportunity in achieving the advantages of one larger “city” by establishing binding political relations and co-operation across complementary urban functions. However, urban relations based on urban specialisation might also occur between cities of different size. Polycentricity is facilitated by a poly-nuclear pattern, but polycentric policies may still be successfully implemented within a hierarchical spatial configuration without necessarily remodelling the balance between the concerned nodes. Urban relations of polycentric systems may be identified as follows:

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Institutional, based on voluntary co-operation; Institutional or political polycentricity relies on co-constructions, co-operation, and on the willingness of territorial agencies to work together on joint projects and strategies. The cities may, or may not, be complementary with regard to urban functions. The functional complementarity is not a pre-condition for cooperation. What is important here is that two or more cities develop common projects in order to build thematic and joint projects, actions and strategies, to exchange knowledge, best practices etc. and to share equipment and upgrade infrastructure (cultural, social, transport, etc.). Structural, resulting from “spontaneous” spatial development. Structural polycentricity is related to the organisation of a territory via spatial patterns of economic or functional relations and flows. Structural relations and flows are not necessarily nested in urban strategies. Rather, they are “spontaneous” products of overlapping housing or labour markets, of specialised networking between urban located actors or simply historically established cultural, economic or social relations. Thus, structural polycentricity may be identified as road, rail and air traffic, financial flows, information flows, etc. Different kinds of polycentricity are related to different spatial levels. Distant urban areas may be connected through various types of relations such as market-based flows or exchanges, or co-operation directed towards the sharing of experiences, methods, or information, or by participating in a development project, etc. These relations are characterised by connectivity rather than proximity. Spatial proximity between urban areas potentially allows other forms of co-operation and integration: economies of scale through shared infrastructure, such as universities and hospitals; common strategies to manage flows and exchanges generated by commuters, telephone calls, etc… The most frequently used indicator for economic integration is travel-to-work intensity between cities. A situation with intense commuter flows in both directions would be a sign of integration and of polycentricity. Examples of institutional polycentricity are co-operation in spatial planning, common visions, shared functions etc. The EU has encouraged cooperation in cross-border regions through Interreg IIIA programmes.

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6.5 Gateway (cities)

ESPON 1.1.1 definition of Gateway city Basic definition The geographical concept of gateway, in the current framework of economic globalization, refers to the capability of some territories to attract flows and to built up relations with actors operating at different geographical scales. Basically, gateway territories represent transversal geographical entities operating at different scales in the local-global dialectic (Conti, 1997). In case of cities, gateways are poles in a system of relationships of which the distinctive feature is that all flows pass through them. On the one side, they attract flows of all kinds – material or informational – from abroad, re-disseminating flows on the continent. On the other side, gateway cities are nested in local network spaces, connecting low-level local cities that have not direct access to supra-level networks, assuming the function, in this sense, of connecting regional economies to the global space (Camagni, 2002). Moreover, this “gate”-like function is in favour of both the development of interface activities, which, in a highly competitive environment, must challenge a greater free flow, and the development of activities enhancing those flows. Nevertheless, the concept of gateway may be applied at larger geographical scales, for example the national ones. In some cases, many peripheral regions or states have not the capability to fully interact with global flows, and therefore they relate to other transversal regions acting as gateways: this is the case of many peripheral territories whose economic activities are linked to relations with semi-peripheral states, according to Wallerstein’s terminology: this is the case of some African countries, leaning on Northern African countries in order to built up economic flows with Europe (Società Geografica Italiana, 2005). Even more important, the concept should not be considered in a strictly hierarchical way (central regions connecting peripheral ones), and it has to be considered how spatial proximity still plays a fundamental role in shaping economic flows, favouring or hampering the penetration of products, investments, commercial flows, the movement of workers, etc.(see Dunning, 1993; Shatz and Venables, 2000). In this sense, for example, Mexico (and particularly the territories next to the US border) constitutes an important gateway for European and Asian multinational enterprise willing to penetrate the US market (without paying the high costs of an US location; de la Martínez and Ramírez, 2002). In a different sense, Japanese enterprises historically developed some export functions in semi-peripheral Asian newly industrialized countries, in order to use these regions as cheap gateways for the exportation of goods in the Pacific area (Le Heron and Park, 1995).

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Links with other concepts The presence of gateway territories is strictly connected to the construction of a more polycentric space: not every territory has the possibility to interact with every geographical level, and the presence of gateways allows an ampler participation of the regions in the global economic dynamics. Obviously, the presence of gateways does not imply, per se, the presence of a more balanced territorial structure, since every gateway is basically selective in its connection, reflecting different spatial structures of power, connecting some territories and not others. For example, the situation of a country strongly polarized by the national capital (acting as a gateway) is quite different from a more balanced territorial system. At urban level, gateway-cities enjoy the most favourable situations for the formation of poles of development. It is assumed that as regards the expansion of such poles, the diversification and the increasing complexity of their functions have everything to gain from the reinforcement of this inter- and intra-continental polarisation. Territorial impact Harbour-cities, so as some border cities, have often been great gateways of national and continental territories. Following the development of air transport and the fast and massive flow of non-material commodities on the new networks, the models of gateway-cities have diversified and now new continentally based locations can fulfil this traditional role. These indisputable advantages for the development of a greater territorial polycentricity are not definitely secured. With the improvement of the speed of circulation, the extension of the distances of commerce, the gradual elimination of national borders, these gateway functions have become extremely competitive. The towns concerned – or liable to become concerned – must attempt to diversify these functions and gain other activities that, in a very unstable context, can position them in a favourably competitive situation. These particularly demanding conditions appear to be more in favour of the development of large metropolises, which themselves enjoy a relatively more advantageous position. Development strategies The attention given by the SDEC to the European “gateway-cities” is related to their potential development. In a polycentric territorial system, the Hubs, multi-modal platforms are among many of the assets inevitably associated with the development of real gateway-cities. However, they (the hubs and multi-modal platforms) do not guarantee the development of gateway-cities. This development requests that the advantages offered by the new gateway-cities be

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enhanced further than those strictly resulting from well-organised transport infrastructures, for example by furnishing competitive functions, high-skilled and knowledge intensive services; in this sense, Malecki (2002) ironically assessed that “both clicks and bricks are required”, emphasizing the importance of traditional material infrastructures and “new” economic functions. References:

• CAMAGNI R., 2002, “On the concept of territorial competitiveness: sound or misleading?” Urban Studies, v. 39, n. 13, pp. 2395-2411.

• CONTI S., 1997, Global-local perspectives: a review of concepts and theoretical proposals, in M. Taylor e S. Conti (eds.), Interdependent and Uneven Development. Global-local perspectives, Ashgate, Aldershot, pp. 15-45.

• MARTINEZ (de la) M.E. & RAMIREZ C.Q., (eds.), 2002, Globalización, trabajo y maquilas: las nuevas y viejas fronteras en México, Fundación Friedrich Ebert, Centro de Investigaciones y Estudios Superiores en Antropología Social, México.

• DUNNING J.H., 1993, Multinational Enterprises and the Global Economy, Addison-Wesley, Reading (Ma).

• LE HERON R., & PARK S.O., (eds.), 1995, The Asian Pacific Rim and Globalization, Ashgate, Aldershot.

• MALECKI E.J., 2002, “Hard and soft networks for urban competitiveness”, Urban Studies, v. 39, n. 5-6, pp. 929-945.

• SHATZ H.J., and VENABLES A.J., 2000, The geography of international investments, in G. L. Clark, M. Feldman and M. S. Gertler (eds.), The Oxford Handbook of Economic Geography, Oxford University Press, Oxford, pp. 125-145.

• Società Geografica Italiana, 2005, Scenari italiani 2005. L'Italia nel Mediterraneo. Gli spazi della collaborazione e dello sviluppo, Rapporto annuale della Società Geografica Italiana, Roma.

• WALLERSTEIN I., 1974, The Modern World-System, The Academic Press, New York.

6.6 Area of influence

The expression “area of influence” supposes a centre which polarises a portion of space. This concept can be implemented a different levels. It was first defined in urban geography and referred thus to cities whose areas of influence are more or less wide according to their level in the urban hierarchy (W. Christaller; G. Chabot, 1952). To make an evaluation of their influence, geographers use various criteria such as the commercial attraction, the number and the frequency of flows of commuters working in the centre, flows of persons seeking services

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not available in their towns of residence and provided only by the centre. The areas of influence vanish progressively with the distance from the centre. The concept of area of influence has thus much to do with the couple centre / periphery, the latter being to a certain extent subjected to the former. The expression “area of influence” has also a (geo)political meaning. It refers to the capacity of a country to exert its authority by the mean of a more or less strong pressure on other countries. These “influenced countries”, whether they are contiguous or not, form the area of influence. In that sense, it was commonplace to talk about the area of influence of the United States and of USSR during the cold war. The influence of a country is based on asymmetric relations and can be exerted through various means: the force of the arms, the economic power (for instance the production of oil, gas and rare natural products), the official development aid, the food aid and agricultural exports… The influence can also be based on a soft power which designates the capacity of a country, or a group of countries, to convince other countries without the usage of any direct explicit constraint. But the word influence must be used with precautions. On one hand, its meaning in the organization of geographical space is quite vague. The limits of an area of influence are generally fuzzy. They may be overlapped by other areas of influence. And areas of influence often happen to be constituted by not contiguous countries. On the other hand, the word influence is relevant to the action of a person on another person. Is it then possible to extend its meaning to cities, to states or groups of states? When one tries to apply this concept to EU, it becomes even more confusing and tricky. The area of influence of EU would be constituted either by a set of countries located in its neighbourhood or by all the countries functionally linked to it through trade or investment flows and official aid. This first definition is very problematic because the word “neighbourhood” can be defined in several ways: geographical proximity, functional integration, connectivity? The area of influence of EU would be composed by countries economically dependent to it. It would be thus more efficient to use the expression “attraction area” than “area of influence”. Which criteria can be used to estimate the level of economic influence or the economic power exerted by EU? What about the political influence of EU? Some countries belonging to EU have a real political influence but EU as a whole do not have any, excepted on the official or unofficial candidate countries such as Rumania, Bulgaria, Turkey, Croatia, FYROM, eventually Ukraine… in so far as these countries are or will be soon obliged to implement various reform to enter EU. As a consequence, the

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economic influence of EU spreads over a much wider part of space than its political one. According to the domain concerned (migrations, trade, investments, remittances…), the influence area of EU is more or less wide and its shape is different. Consequently, its limits can not be clearly determined. The cultural influence of EU at last is even more uneasy to define and to determine in space. Every one knows the cultural influence of the United States. But even in this case, one can wonder if there is a area of US cultural influence. As far as Europe and EU are concerned, they are culturally so fragmented that it would be more relevant to seek the cultural influence of its members (Great Britain, France, Spain, Germany…). In the case of France, the limits of the “francophonie”, that is to say the countries where French has the status of official language are a kind of cultural influence. In the case of Great Britain, is it still possible to take the English language as a mean of cultural influence? This language is now associated to the cultural leadership of the USA. References:

• CHABOT G., 1948, Les villes, Paris, Armand Colin. • CHABOT G., 1961, Carte des zones d’influence des grandes villes

françaises, CNRS, Mémoires et documents du CRDCG. • COHEN S.B., 1963, Geography and Politics in a World Divided, New York,

Random House. • CHRISTALLER W., 1966, Central places in Southern Germany, Englewood

Cliffs, Prentice Hall. • LACOSTE Y., 1983, Dictionnaire de géopolitique, Paris, Flammarion. • LOSCH A., 1953, The Economics of Location, New Have, Yale University

Press.

6.7 Barrier Effect

The border effect is a methodology, initiated by McCallum (1995), in order to estimate the negative impact of crossing a border on trade flows. It allows to measure the degree of economic integration among several countries or the degree of fragmentation of great markets such as NAFTA or EU. To measure the border effect between two territories, it is necessary to use a gravity model. The gravity model predicts that the exportations from a country (or a region) i to two other countries j and k, characterized by the same population and located at the same distance from the country i, should be equivalent. When the exportations are lower than the predictions of the gravity model, there is a border effect.

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The conclusions of all the studies dedicated to this effect are the same. Notwithstanding the formation of multinational regions in the context of the globalization, the political borders still have an impact on the international flows. In spite of all the agreements signed and implemented by EU and the neighbour countries, the border effect can be a way to measure the level of integration or fragmentation inside the great Euro-Mediterranean region. The border effect may not reach the same intensity at every level. An international border can hamper the increase of goods and commuters flows for instance at the local level, and the local cross border cooperation maybe unsuccessful, while trade and migration flows can increase rapidly at the national or macro regional level (country to country level). This concept, which can be used in various domains such as migratory flows, trade flows, investments flows, is weak and should be used only in a heuristic way. It is not able to make any distinction between two things: What is relevant to the level of interaction between two territories separated by a border (international border, external border of a custom union, free trade agreement zone or common market)… What is relevant to the preference of social and economic agents for exchanges with other agents in the same territory (Community preference in the EU). The concept of barrier effect can be used in other contexts. It is relevant as far as cross border and transnational cooperations are concerned. In many border regions, the implementation of genuine joint project of local development is hampered by administrative, economic or cultural differences. In that case, the barrier or border effect can not be estimated by statistics methods any more. It is only a fact that can be overtaken by administrative of economic reforms. References:

• Mc Callum, J. (1995), “National Borders Matter: Canada-US Regional Trade Patterns”, American Economic Review, vol 85, pp. 615-623.

• HELLIWELL J.H (1998) How Much Do National Borders Matter ?, Brookings Institution, Washington D.C.

• Freudenberg, M., Gaulier, G., Ünal-Kesenci, D., 1998a. La régionalisation du commerce international : une évaluation par les intensités relatives bilatérales, CEPII, Document de travail 98-05.

• Freudenberg, M., Gaulier, G., Ünal-Kesenci, D., 1998b. La régionalisation du commerce international, Économie internationale 74, 15-42.

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6.8 Neighbourhood

The concept of neighbourhood is quite vague. In a current and empirical meaning, the word designates a localised group of persons living near one’s own place of residence. For example, the persons that are living in the same building. But even at this very simple level, one has to face up with confusion. Where does the neighbourhood start? Where does it end? Is it limited to the persons living only on the same floor of one’s building? Or does it encompass the totality of the residents of the building what ever its size is? One can also wonder if the people living in the building located on the opposite side of the street are also neighbours. The confusion can also come from the context in which the word is used: urban or rural context for example. In a rural area featured by low densities of population and scattered human settlements, the distances between neighbours may cover several kilometres. This idea is well illustrated by an aerial photography of the agricultural Middle West in the United States or in Canada, where each farm is isolated. In spatial analysis, the word neighbourhood is used as a real concept firmly defined. It designates places which are next to each other and eventually form a contiguous ensemble. One can consider that two places are neighbours when they are adjoining. They can be considered also as neighbours when they are close to each other, but not necessarily adjoining, if interactions exist between them. In that sense, the neighbourhood of a place (a country, a town, an ensemble such as EU) involve more or less wide portion of space which interacts with that place. The neighbourhood ends when one reaches a certain distance (a threshold or limit). Between the place and the limits of its neighbourhood, the interactions between them progressively decrease and then vanish. This decrease of interaction with the distance is a gradient. In another way, the limit of the neighbourhood can correspond with a discontinuity which is a rapid variation of one or several statistic indicators. European Neighbourhood Policy, functional neighbourhoods, « Euromed »: definitions Since the declaration of the Commission in March 2003, a new term has appeared in the European spatial analysis: the term of « Neighbourhood ». The European Neighbourhood Policy was launched in 2004. from 2007 onward, the European Neighbourhood Partnership Instrument will replace the former Meda and Tacis funds, for the following « ENP » countries:

- the previous « Euromed » partners of the Barcelona process launched in 1995 minus Cyprus and Malta of course and minus Turkey (since it has become an formal applicant for UE), that’s is: Morocco, Algeria, Tunisia, Egypt, Palestinian Authority, Jordan, Syria, Lebanon, plus Libya now on;

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- the western NIS: Armenia, Georgia, Azerbaijan, Moldova, Ukraine, Belarus.

Russia will benefit from a special policy, with the same main objectives than that of the ENP (the four spaces of free trade, services, capital and persons: « everything but institutions ») but in the framework of a specific partnership. This institutional definition of the « Neighbourhood » has two limits. The first one is geographic. The large region that encompasses Europe entails other countries than that of the official list (Espon + European Balkans + ENP countries). For instance, Western Kazakhstan is clearly a part of this region due to the growing importance of the Caspian’s oil for European procurements; the whole Middle East including Irak, Saudi Arabia and partly the Persian Gulf too; for Europe’s sake, all these countries are characterized by a risk of political and social instability, important flows of migrants transiting or departing from a country or a group of countries, presence of highly strategic natural resources, etc. It is of utmost importance to have a broader view of the European region, because this large regional issue is becoming a relevant scale of the global competition that Europe tackles. See the role of the East Asian integration in the economic success of Japan, Tigers and China; see the importance of the integration of Mexico in the North American economy and the growing integration of other Latin American economies. Thus, it is necessary to distinguish two different categories:

- The official list of countries that are concerned by the ENP (« ENP countries » in the report when it comes to an institutional definition) form what can be called the “political neighbourhood”. Of course this list is firmly defined;

- The countries that belong to the large European region form the « functional neighbourhoods » in the report when it comes to a functional definition). This functional definition cannot be delimitated precisely and for eternity, since it varies according to variables and periods. For instance as far as migration flows are concerned, and given historical and linguistic links, a part of Western Africa happens to be a part of this region.

The second limit of the word « Neighbourhood » is political, because it stresses on the asymmetry of the relationship between Europe and surrounding countries. This was already a problem for the previous term « Euromed », because it implicitly meant the association between Europe and… a sea, the Mediterranean (whose southern shore would be not even named). The failure of the last Barcelona summit in November 2005, where only two Arab leaders joined, shows that an efficient method should be based on symmetry. It is true that, up to now, the region that encompasses Europe has been very much polarised by the European countries. But for both historical (colonisation) and actual political

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reasons, it is obvious that its governance on the long run can not be based on such an asymmetry.

6.9 Territorial cooperation/competition

For the dictionary of concepts, the expression “territorial competition” is not relevant because it refers explicitly to animal behaviour. Competition can not be compared to animals or individuals struggling to conquer and dominate a single territory so that they can ensure their preservation. It is much better to talk about “competition of territories”. This expression refers to different territories which are competing in order to attract investments, eventually foreign investments, and other economic factors (firms, high skilled labour force, etc…). There is already a huge amount of economic literature dedicated to the topics such as competitiveness, process of agglomeration of economic activities and so on. But the question of the competition has been largely neglected either by economists, geographers or spatial planners. This conceptual black hole is due to several causes: - Policy makers have been really aware only recently of the heterogeneity of territories. - In the seventies, policy makers and scientists became aware of the fact that a territory might be attractive for a firm, not only because of its geographical and physical features but thanks to the social, economic and legal environment that is given to economic agents. - The clear conscience of this economic phenomena was later fostered by the implementation of the European regional policy, through the process of allocation of structural funds. This allocation has always been achieved on a regional basis, in order to reach socio economic convergence between the eligible territorial units. - Later, anyone who was involved in the regional policy could notice that the process of convergence was moving on more rapidly at the national level and more slowly at the regional level with regional disparities rapidly increasing inside each country. - Last, because of the decentralization which is now moving forward in many European states, local authorities are trying to set up incentives in order to attract firms and investments. They are trying not only to be more competitive than before but also more competitive than other regions. To remain attractive, the territories are condemned to underline their differences. These differences can be classical comparative advantages, but it is no more enough. The word “competition” is confusing:

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- can we speak of a competition of territories and compare them to firms which are competing to dominate a market? - does it simply deal with territories which compete to attract more investments and value producers than others, by offering what the others do not offer? - the term supposes that these territories are no more some passive pieces of the Earth surface which offers comparative advantages such as natural resources, good geographical locations or cheap labour force and so on. The territories have become real actors having into their hands the factors of their own development. They must send to firms and investors explicit signs that they are ready go along with them in a mutually advantaging association for long periods. They must show that they are able to offer them a high quality environment based on elements which are not delivered anywhere else. The word “territory” is also confusing: - does it refer to the states? We know that in the context of commercial and financial globalization, the states are engaged in a competition for the attraction of investments made by firms. This competition is now more visible through the process of relocation of industrial activities and services. - does it refer to the institutional regions? Because of the decentralisation, which has gone very far in many countries, regions are progressively becoming economic agents. - does it refer to smaller territorial units and local productive systems, such as industrial districts which are based on networks of small and medium size firms and networks of social relations, without any institutional basis? In order to overrun these conceptual difficulties, we can propose a large definition of the word territories which does not refer to only one type of territorial unit: - A territory is a piece of space organized and handled by political, economical and social actors who are able to set out non explicit or explicit rules, legally based or not, in order to support their relations. That means that a territory does not have only a geographical base. It can be defined as a mixture of certain kinds of relations between actors. - Each territory is based on widely shared rules and on its own rules. These rules may be totally different in different territories. - These rules are a subject of competition between territories in order to attract economic actors, in order to reach a status as high as possible in the value chains and to guarantee to their inhabitants a high level of well being. Many authors have recently reminded that we do not have a clear representation of all the pull factors taken into account by firms and investors when they make decision for the location of their activities (Veltz). There is no absolute factor, which would be efficient every where and every time. It depends a lot on the

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type of activity and on the size of the firm concerned. The word « competition » must not let us think that every thing is politically planned by these territories. As we said above, some of these territories are not institutionally based. And even in the case of real political regions, many pull factors are not explicitly related to institutions. The problem is that non institutional factors are quite uneasy to identify and eventually to implement. Moreover, one factor may be efficient only for a certain period of time but not for ever. And the economy is less and less based on the territorial frames such as regions and States. Economical relations are more and more unstable and flexible, whereas regions and states are necessarily engaged in long run processes. To be efficient, every political or institutional response proposed by territories must be based on “Taylor-made adjustments”. It is a necessary condition to make local conditions and global economy meet. What kinds of advantages are researched by firms and all economic actors? - A large consumption market as close as possible which is a kind of insurance against the variations of the consumption levels and economic contingence. - Low costs of production. - High quality of infrastructures and presence of many externalities. - High quality of environment (that is to say high standards and quality of life for inhabitants) and possibility of a high level of well being for the labour force (with high employment rates). - High quality of local social relations, well adapted to the flexibility of modern economy. - Institutional partners which are able to offer them a long term beneficial association. The firms need to receive insurances that the territories (that is to say local institutions) where they decide to settle down show a firm commitment in a process of exchanges in various domains, for long periods of time: training of labour force, exchange of useful information. The firms need to feel that that can rely on a territory which can eventually become an insurance against possible commercial and economic risks. References:

• ADAMS J., ROBINSON P., (ed), 2002, Devolution in Practice. Public Policy Differences within the UK, Ippr.

• BENKO G., LIPIETZ A., 2000, La richesse des régions, Paris, PUF. • CAMAGNI R., 2002, « On the concept of territorial competitiveness: sound

or misleading?”, Urban Studies, vol 39, n°13, pp 2395-2411. • Commissariat général du Plan, 1996, Systèmes productifs, emplois,

territoires. • KRUGMAN P.R., 1994, « Competitiveness, a dangerous obsession »,

Foreign Affairs, vol 74, n°2.

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• PORTER M.E., 1990, The Competitive Advantage of Nations, Free Press, New York.

• SCOTT A.J., 2001, Les régions et l’économie mondiale, Paris, L’Harmattan.

6.10 Territorial Cohesion

Territorial cohesion is more a political agenda than a scientific concept. Recently, it has been used frequently in the European spatial policies debate and the definition given here will be mainly based on the European institutions approach. Classically the term “cohesion” was used concerning the “economic and social cohesion” that is to say the aim of a balanced development throughout the EU. It refers both to the idea of balanced growth and the idea of supplying a minimum of essential services to every inhabitant of the European territory. According to the history of the concept, (ESPON 3.2 Report), the idea appears for the first time in the Single European Act (1986) with the idea of reducing disparities of development of the various regions. However, at this moment the disparities were measured only in terms of economic level (GDP/inh). Later, the concept “territorial cohesion” appears in the Amsterdam Treaty (1997) related to the services of general economic interest. Recently, the territorial cohesion is integrated more clearly to the political objectives of the European Union, notably in the Treaty establishing a Constitution for Europe (2004): “The Union shall promote economic, social and territorial cohesion, and solidarity among Member States” and its meaning is more detailed in the Third Report on Cohesion. As the Third Cohesion Report expresses: “The concept of territorial cohesion extends beyond the notion of economic and social cohesion by both adding to this and reinforcing it”. In policy terms, the additional objectives are to make more coherent sectional policies (which have spatial impacts) and regional policies. The concern is also to improve territorial integration and encourage cooperation between regions. According to the European orientations, the territorial cohesion is multi-dimensional taking into account the reduction of economic disparities, the cohesion between regions and the social and environmental perspectives. A central idea is that citizens must have access to any essential services and basic facilities, wherever they live in the European Union. The article 16 of the Treaty “recognises that citizens should have access to essential services, basic infrastructure and knowledge by highlighting the significance of services of general economic interest for promoting social and territorial cohesion.”

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Another pattern of the concept is the multi-scale approach: problems are seen firstly at the European level with the disparities between European regions, then at each national scale, with the differences between metropolitan areas and the less favoured regions, until the local scale with the question of intra-urban discontinuities and the ghetto issues. Adding the “territorial cohesion” objective is crucial to take into account all the problems that might concern Europe in terms of spatial planning. Promoting this objective implies to measure it. The classical economic aspect of the cohesion is easy to measure with indexes of distribution (Gini index). But the data concerning environmental and social perspectives do not exist for the moment (ESPON 3.2).

6.11 International Division of Labour

Definition The international division of labour (IDL) means that countries specialise in certain productions and exchanges. This concept can be seen as the implementation of the idea of division of labour but at the scale of the international economic relations. The idea of social division of labour, notably developed by Adam Smith in economics, is based on the interest of individuals of specialising and exchange the output of their work, in particular on the level of the productivity. The concept of spatial division of work also exists. It is a more general concept and refers to the fact that the generalisation of trade has developed a spatial division of labour, in the form of relative or absolute specialisations of places and regions. In this sense, international division of labour is one form of the spatial division of labour which includes it. Theoretic base and stakes The IDL has direct links with the Ricardo theory of comparative advantage which explains that a country must specialise in the production (and exportation) of goods for which its comparative advantage (the production cost relative to others products) is the best relatively to the other countries. This theory pushes countries to specialise in certain productions, stimulate international trade and IDL, because, according to this theory, it is necessary beneficial for any countries to specialise and participating to the international trade. However some economists explain that the way the IDL is distributed has very significant implications. In theory, this distribution is based on the comparative advantages of the various countries: the country equipped well in factor work will produce goods containing much of this factor, while the country having capital and engineers will produce goods of high technology. However these various

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choices will not lead in the long term to the same advantages, in particular because the world demand does not grow in the same way for all the products. The developing countries which export especially one or two basic commodities will clearly be the losers of the IDL which marginalise them rather than integrate them. The Marxist economists claim that, by the existing IDL, the capitalist countries do exploit the developing countries in an “unequal exchange”. The theory of comparative advantages has been questioned by P. Krugman. When discussing the international division of labour there are two key concepts: the principle of comparative advantage (absolute or relative) and specialisation. To understand the principle of comparative advantage it can be useful to look at the simpler principle of absolute advantage. A country (or region or individual) has an absolute advantage in the production of goods or services if it can produce those goods or services with fewer resources than other countries (or regions or individuals). The opportunity cost is the alternative foregone. If two individuals (or regions or countries) have different opportunity costs of producing goods and services, the individual (or region or country) with the lower opportunity cost has the comparative advantage in that good or service. The country (or region or individual) will specialise in the production of the good or service in which they have the comparative advantage. A specialisation means that productivity will increase, but a specialisation requires exchange i.e. trade. If this system is going to be profitable for all countries (or regions or individuals) specialisation and trade are needed. The historic mutation of the IDL The IDL is not fixed at all and has changed considerably since the 1970’s. A classical type of IDL, arisen from the colonial period, has prevailed for a long time: the one in which poor countries export their raw materials in exchange of manufactured goods coming from Northern countries. This distribution of work between countries can be regarded as being an IDL of complementarity since the exchanged goods are not of the same nature. This is what we call an “inter-branch” trade. Thereafter, there was a change in this traditional IDL. Firstly, an IDL of competition appeared between industrialized countries, with a great growth of the “intra-branch” trade; in addition, some developing countries, mainly from the Southeast Asia, having become new industrialized countries entered the market of the manufactured goods, first of all basic goods, then technological goods also. For measuring the international division of labour, one has to study the trade structure of countries or zones. An analysis of the trade between European countries shows for example a very intra-branch pattern, which comes notably from the differences of taste of the consumers.

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However there is another type of intra-branch trade which exist between countries having great different levels of development and which is organised by transnational firms in their production process. One product is made by processes taking place in different countries. A great part of the actual trade of manufactured goods is now organised by transnational firms which split their production spatially according to each implantation’s advantages. That explains why the trade of intermediary goods reaches roughly 40% of the value of total international trade. There is obviously a direct link to the concept of value chain since more and more, the different stage of the production processes are split between different countries. Consequently that kind of strategy implemented by transnational firms it’s a powerful factor of regional integration. Refrences:

• RICARDO D., 1993, Des principes de l’économie politique et de l’impôt, Paris, Flammarion.

• BAUD P., BOURGEAT S., & BRAS C., 2003, Dictionnaire de géographie, Paris, Hatier.

• SMALL J., & WITHERICK M., 1996, A modern dictionary of geography, third edition, Arnold, London.

• SMITH A., 1991, Recherches sur la nature et les causes de la richesse des nations, volumes 1 & 2, Paris, Flammarion.

• KRUGMAN P., & HELPMAN E., 1987, Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition, and the International Economy, Boston, MIT Press.

• DUNNING J.H., (ed.), 2000, Regions, Globalization, and the Knowledge-Based Economy, Oxford, Oxford University Press.

• SHATZ H.J., & VENABLES A.J., 2000, “The geography of international investment”, in G. CLARK L., FELDMAN M., & GERTLER M.S., (eds.), 2000, The Oxford Handbook of Economic Geography. Oxford University Press, Oxford, pp. 125-145.

• WONNACOTT T.H. & WONNACOTT R.J., 1986, Free Trade between the United States and Canada, Review of Economics and Statistics, vol. 68, November, pp 618-627

6.12 Territorial / Spatial differentiation

The concept of spatial differentiation is the central object of geography, which aims to understand any form of spatial inequality. Space has a complex and dialectical relation with the social reality as a whole. On the one hand, space is always building on the existing space, and emerging social systems remodel permanently the spatial “material” on which they act. On

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the other hand, the space itself plays a major role in the social novelty and in the emergence of new social systems, since they always appear in a more or less definite territory, diffuse and rebuilds as they advance. The emergence of the nation-state gives a perfect illustration of this dialectical relation between the social and spatial reality. The modern state has shaped in a given space, with specific historical paths but which all end up at the correspondence between nation and territory with a political entity: this political construction is thus eminently spatial. In return, the political delimitation of the territory, or territorial delimitation of the politics, will produce spectacular homogenizing effects on the space: cultural homogenization by the mean of education or mass media, socio-economic homogenization by the mean of social transfers, political and ideological standardization. These effects are so powerful that actual boundaries often correspond to clear spatial splits about politics, languages or landscape, including inside the European space. This dialectical relation has also to be found in the field of social and spatial inequalities. As it is argued in the “Words of geography”: “the fact of being here or elsewhere is a creator of social difference, taking into account the geographical oppositions of systems, of accessibility; membership of class involves differentiations in the settlement, the choice and the frequentation of the places, and in the end true segregations” Reference:

• BRUNET R., FERRAS R. & THERY H. (1992), Les mots de la géographie : dictionnaire critique, Montpellier, Reclus.

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PART B

THEMATIC ANALYSIS

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7 DEMOGRAPHIC THEMATIC ANALYSIS

7.1 Demographic flows towards Europe

Mats Johansson

Daniel Rauhut KTH/ITPS

7.1.1 A background sketch During the past decades Europe (WUTS1111- WUTS1122) has experienced an aggregate immigration surplus form other parts of the world. Europe is – together with North America, Oceania and the Arab Oil Countries – an immigration region. This fact hides, however, that not all European countries are immigration countries - and even some redistribution of people have been a central ingredient in the population development within Europe. The big problem in analyses of migratory movements between nations and regions is the shortage of data with regard to origin and destination. One consequence is that gross flows are difficult to estimate and this has impact on analyses of convergence and divergence, of integration and disintegration, of symmetrical and asymmetrical migration patterns. This also means that much of the analysis must be hypothetical and theoretical based on available data. In a project like “Europe in the World” this means that existing data over net-migration – both total number of people and net-migration rates - will be the point of departure for description and analyses. More detailed analysis is possible only for selected states and is presented in case studies. The migration pattern within Europe and even the migratory flows towards Europe can be divided in four phases after WWII. The fist phase was characterised by “forced migration” as a consequence of the war. The second was more of a redistribution phase of people as a consequence of differing labour market conditions and especially then from the Southern to the Northwestern countries in Europe. The slow-down of the European economy resulted also in a slow-down in the demand for labour import and the labour market related migratory movements began to decrease. Instead refugee migration got an increased importance and in the middle of the 1980s the labour market related immigration almost disappeared even if family reunion migration continue to grow. The fourth period was characterised by the migratory effects of the collapse of the Soviet Bloc and the upheaval of the former Yugoslavia. Both cases resulted in huge migratory movements with impact on the demographic

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development and the demographic structure in the origin as well as the destination countries. The figure below gets a hint about the migratory movements during the 1990s. It confirms the observation mentioned above that North America, Europe (excluding the eastern part and Balkan), Japan, Australia and New Zeeland were the immigration areas at world level and that South America (including Mexico), Asia (excluding Japan), Africa were the large emigration areas. 7.1.2 Demographic flows towards Europe – a selective process

Figure 7-1 : Permanent migrant flows

From the map above it seems obvious that the redistribution of people is a selective process. North America is a net-immigration region from all other parts of the world including Europe. The latter is also an immigration country with regard to all other parts of the world with the exception of North America, Australia and Japan during the 1990s. The most accentuated migration pattern is instead the huge flows – and then redistribution of people – within Europe that seems to have huge impact on the population development and the polarisation process. From other studies it seems obvious that West Central Europe was the winner and the peripheral areas were losers.10

10 See e.g. ESPON 1.1.4, “Spatial effects of demographic trends and migration”

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These migratory flows from the peripheral areas to the central ones were more characterised by asymmetrical flows than of symmetrical. This is valid both concerning the amount of people and the structure of the migrants. There are signs that many of the immigrants to Europe from other parts of the world contributed to the polarisation process and then also eroded many regions of highly qualified people. It must, however, be kept in mind that the 1990s was en exceptional decade concerning upheavals, wars and other catastrophic situations that had impact on the migratory movements. The collapse of the Soviet Bloc, the war and turmoil on Balkan with the dissolution of Yugoslavia were only some events that shaken the and resulted in both human catastrophes and increased refugee migration. That this had impact on the population development and structure in Europe is of course not surprising. Housing segregation and problems to get a foothold on the labour market were only some of the problems that were accentuated during the 1990s in Europe with the result that new “populist” parties were taken place on the political agenda. The immigration policy became “hot potatoes” in many European countries. It was, however, not only the turmoil in the former Yugoslavia and the breakdown of the Soviet Bloc that contributed to selective migratory movements. Colonial ties still had impact of the origin and destination of the migrants. This was not a new phenomenon but together with the new migration pattern it accentuated probably the immigration to Europe. These migrants are, however, not in the same situation as refuges as they often have relatives and friends in their new home countries. 7.1.3 Migration – the prime driver behind population change As a consequence of the slow down in fertility rates – for most of the European countries below the reproduction rate today – migratory movements and then inflows of people have been even more important for the population development than before. Many European countries should have had a negative population development without immigration surplus. Even in this case the pattern is quite different between differing European countries – some countries with a low fertility rates may still have a natural population development as a consequence of the age structure. Many countries with a sharp drop in the total fertility rates may still have a young population as a consequence of earlier high fertility rates and low life expectancies. It must, thus, be kept in mind that natural population development is a consequence of a combination of fertility rates and the share of women in fertile ages.

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Foreign-born people contribute to the population development in two broad ways – one by immigration and the other by natural population increase. The second can then be divided in two other parts – higher fertility rates among foreign-born women and a more positive age structure from a reproduction point of view. Without migratory flows towards Europe the ‘population crisis’ would be even worse than it is today. The continuously rising share of females among the migrants ought also have positive effects on the population development. There seems, however, to have been a change in the motives among the female migrants – from being “passive players” accompanying their husbands they are now more or less migrants on their own “premises”. Increased family unification has contributed to the rise in the female share in the developed countries and the social and economic situation for women with access to a lot of educational and employment opportunities have also stimulated female migration to especially Europe and Northern America.11 The higher share among the female labour migrants may perhaps counteract the effects of family reunification but the rising female share ought to have positive effects on the natural population change. So, in this case the increased immigration may possibly result in higher fertility rates and a rising population. 7.1.4 Differing factor endowments and factor mobility The point of departure for the following theoretical reasoning is that there exist two regions at different stages of economic development. Region A - e.g. Europe and especially then EU15 - is in transition from an industrial to a post-industrial society while region B - e.g. developing countries - is in transformation from a society dominated by self-employment and an old industrial structure. There also exist varying "vintages" of both capital (K) and labour (L). Substitutability is limited - instead there exists complementarity between the different vintages of capital and labour. According to this there exist the following relations and connections: K1: capital with old technology K2: capital with new technology. L1: unskilled labour L2: highly educated labour. Between regions at same development stages, there are only small differences in factor endowments – differences, which in much are effects of differences in

11 Zlotnik, 2005

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natural resources. Between regions at differing development stages, there are, at least according to the theory of “revealed comparative advantages”, large differences in factor endowments. This results in the following inequalities with regard to factor endowments: K2A>K2B L2A>L2B The different economic structures in the two regions have also led to an income gap: WL1A>WL1B WL2A>WL2B However, there is not only the wage gap within the same categories. Instead the following wage relation is valid: WL1A>WL2B Capital intensity is also differing: K2A/L2A>K2B/L2B K1A/L1A>K1B/L1B. 7.1.5 Implications for Capital Mobility Different regions have differently composed capital and labour markets, which implies that the development possibilities are not equal regarding choices of technology available for adoption. Since there exists a mutual dependence between the labour force's competence structure and the introduction of new technology, a lack of competence is a restriction to innovative activities and technology renewal. This relationship applies especially in old industrial regions or rural areas characterised by economic backwardness. In these regions, there is often a surplus of labour, but the "wrong" type of labour from the employer's point of view. A labour force such as this constitutes an obstacle to economic change as the technology which is suited to it tends to maintain the structure of the periphery or the backward regions, which develop an obsolete industrial structure based on old investment patterns, where the only location factor is cheap labour. Even if capital moves to labour, this type of investment pattern is not post-industrial. Instead, it is a defensive investment pattern, which to a great extent characterises the early phases of the industrial society in some regions at the same time as it is a sign of the development of a post-industrial investment

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pattern in other regions - in regions where these types of investments are beginning to be history and standardised cheap labour is no longer a competitive advantage. Such technology may be socially desirable, but the risk exists that regional segmentation and polarisation are reinforced leading to knowledge-based production in the centre and standardised production in the periphery. This polarisation will thus be accentuated by a post-industrial investment pattern where highly-educated labour will increasingly be a location factor for mobile capital in the knowledge-based sectors. On the other side, this investment pattern will stimulate the growth of the purchasing power in these countries with an expansion of the home market of both consumer and capital goods. Besides exporting agriculture and cheap industrial goods these countries and regions are turning into a large market themselves. According to the economies outside Europe there are signs of foreign penetration of the economies that are very apparent. The location factor here is cheap labour in standardised production - knowledge-intensive activities are still located in areas where highly educated labour and good infrastructure are the dominating location factors. This development will surely reach the countries in the neighbourhood of the EU too, where the labour costs are still low. However, the purchasing power is also lower in these countries, which will be a restriction on investment in more sophisticated goods production and direct investment towards more standardised labour-intensive production To summarise, the composition of the labour force affects the industrial and post-industrial location patterns in differing parts of the world. Post-industrial activities like knowledge-based industries are most frequent in regions with a high share of highly educated labour. Traditional labour-intensive industrial activities are concentrated in areas with low labour costs and a surplus of low educated labour. These differences in factor endowments and labour markets accentuate both regional segmentation and polarisation in the transition from an industrial to a post-industrial society. 7.1.6 Implications for Labour Mobility If there are some hindrances with regard to capital mobility, these are even more obvious with regard to labour mobility. There is no common labour market at world level today – not even in Europe and its neighbourhood - and there is still a long way to go before this point is reached. This implies, thus, that the following reasoning will be very hypothetical.

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According to traditional push-pull theories, these economic disparities should, in a free labour market, give rise to high migration from the low-income countries to high income regions and countries. This implies that labour surplus and low wages in the developing countries will be one of the determinant factors behind the migration decisions. Even the high wages in the developed part of the world will, however, give some hopes about the future, which will further stimulate the labour mobility process. (For simplicity’s sake, in the following, capital mobility has been excluded from the discussion on labour mobility across the borders.) However, according to the segmented labour market theories, this should result in those workers who are released in the continually structural transition of the economies not being in demand in either the private or the public sectors in the EU. The more far-reaching transformation of the European economy in a post-industrial direction has reduced the demand for traditional blue-collar workers. Instead, there has been rapid employment growth in the service sectors - both private and public. Especially the upper segments in the private service sector have, in recent years, been associated with the transformation of the economy in a knowledge-intensive direction. One result of this transformation process is the looser connection between the business cycles and labour force migration from the second half of the 1970s and 1980s. During these years, migration has rather been a function of political events in other parts of the and, since the beginning of the 1970s, the majority of the immigrants have been refugees working in the lower segments of the private service sector where the educational level is low. The structural transformation of the European economy, with a great increase in employment in the service sector, has also changed the picture with regard to employment opportunities for the immigrants. Instead of blue-collar work in the goods-producing sector, immigrants are nowadays predominantly employed in the lower segments of the service sector. As a consequence of the structural transformation of the European economy, the push factors are now stronger than the pull factors concerning the immigrants. This has also resulted in a changed employment structure, with a large share of the immigrants working in jobs refused by the domestic labour force – the 3D jobs, “dirty, dangerous and degrading”. The economic transformations in the developing countries will not only has implications on the international migration - even the internal migration will be affected. When the unemployment increase and the regional unemployment levels and living standard diverge, the internal migration pattern will be changed in a way more alike the migration pattern in developed countries. This will result in an out-migration from rural areas to larger towns and metro areas, where the labour market is more diversified. From a human capital approach this is rational

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even if there are no jobs directly in the destination areas. The more diversified labour market in these areas will give the migrants a better chance to find a job compared to staying home. Many of the potential jobs will, however, be found in the lower segments of the private service sector and many of the migrants will be self-employed in these kind of jobs. When discussing migration, mobility and labour shortage it is of utmost important to distinguish between short and long term. In a short-term perspective increased immigration can reduce negative effects of bottlenecks in production while in a long-term perspective it can hamper structural transformation and competitiveness. Labour shortage stimulates substitution between labour and capital but also between different segments of labour. History can also witness about that structural transformation of the economies has been one of the most important factors behind higher productivity and increased incomes and well-being. If migration shall be a central ingredient to obtain the “Millennium Development Goals” there is still a long way to go and to hamper migratory movements is not a way out of the population problems in the and especially not for Europe.

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Figure 7-2: A schematic view of migration pattern between regions with differing economic structure according to a traditional push-pull approach and according to an SLM-approach

High-wage region/country

Low-wage region/country

DL

DL

SL1

SL1

SL2 SL2

SLlow

SLhigh

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DLlow

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8 ECONOMIC THEMATIC ANALYSIS

8.1 Structural evolution of population and GDP PPS of World States (1952-1998)

Claude Grasland Clarisse Didelon Nicolas Lambert

UMS RIATE – Géographie-cités 8.1.1 Introduction The aim of this preliminary study on demographic and economic evolutions at the world scale is not to provide final results on thematic topics which will be analysed in depth by specialised research teams (IGEAT for Economy and ITPS for Demography) during the development of the project ESPON 3.4.1 with much more detailed indicators and interpretation. It is rather to explore basic exploratory tools related to cartography and statistical analysis and to propose a validation of the methodology which will be applied in the future. To provide such an experiment, we have decided to focus on a long term database realised by Angus Maddisson on the economic and demographic situation of World States from 1950 to 2000, available on his personal website and published in 2003 by OECD. This database has been completed by estimation for some missing values but initial information established by A. Maddisson has been fully respected when available. The most important modification introduced in our analysis was the application of a five-year smoothing on all figures of population in order to reduce the influence of exceptional fluctuations and to focus the analysis on main trends of evolution during the whole period. Due to this five-year smoothing, the time span is reduced from 1950-2000 to 1952-1998 because 1952 represents in fact the mean value of 1950-54 and 1998 the mean value of 1996-2000. Another important modification of the initial information was the transformation of each absolute count of population or GDP into a frequency of the world sum. For example the population of France in 1998 (60 Millions of inhabitant) is divided by the population of the World (6 Billions) in order to obtain a frequency of world population (1%) which can be easily compared to the frequency of GDP of France at the same time or the frequency of population of France from another year.

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It is finally important to keep in mind that the table of GDP proposed by Maddisson is expressed in PPPs which has an important influence on all results which would have been strongly different if we had chosen to measure the economic size of world States in current US $. Concerning population, the figures proposed by Maddisson are very similar to those proposed by other international sources (UN, CIA) and using another type of source would not modify the results except in some very specific cases. Last, we decide not to take into account in our analysis States of whose population, GDP or surface represent less than 1 millionth of the world. Those very small states could have introduced bias in our results as they often have very specific evolution of GDP or population. 8.1.2 Demographic evolution of world states 1952-1998

8.1.2.1 The evolution of the demographic sizes of European States at the world level

The distribution of demographic size of States during the whole period is characterised by a strong concentration in a very limited number of States. The European territory is characterised by the lack of very large States and the great heterogeneity of demographic size, from very small to medium or large (map 8-1) Very large States (G>1: more than 10% of world population) From 1950 to 2000, China and India are the only States which can be considered as “very large” (G<1: more than 10% of world share) and they always represent together at least the third of the World population. Large States (1<G<2: between 1% and 10% of world population) In the 1950’s, the ESPON area accounted for 5 States which could be considered as “large” from a demographic point of view at the world scale: Germany12, U.K., Italy, France and Spain. But actually, only France and Germany remain in this category and still represent more than 1% of the world population, and probably not for a long time in the case of France. In the particular case of Eastern Europe, the former USSR which could be considered as a “large State” in the 1950’s has been replaced by new States among which two can be considered as “large” actually (Russia and Ukraine). In the rest of the World – and considering actual political boundaries - some States remain demographically “large” on the whole period (USA, Mexico, Brazil, Japan, Indonesia, Nigeria, Pakistan, Bangladesh and Vietnam) and some others are moving from “medium” to large. This last category is particularly interesting because it concerns at least 3 States located in the neighbourhood of Europe: Turkey, Egypt and Iran.

12 Even if we take into account the geopolitical division of this period, western Germany represented more than 1% of world population in 1952 and could be considered as « large ».

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Medium States (2<G<3: between 0.1% and 1% of world population) The third level of demographic size defines the medium situation which is characteristic of the majority of the ESPON States in the 1950’s as in 2000. But with a double movement of former “large States” becoming “medium” (UK, Italy, Spain) and former “medium States” becoming “small” at the world level (Denmark, Norway, Finland, Austria…). Small States (G>3: less than 0.1% of world population) As described above, an increasing number of ESPON states are becoming member of the category of “small” or “very small” States at world level, from a demographic point of view. The political division of former federations (Yugoslavia, USSR, Czechoslovakia) has enhanced this trend which was basically related to slower demographic growth in Europe than in the rest of the World.

Map 8-1 : Share of the world population in 1952

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Map 8-2 : Share of the world population in 1998

8.1.2.2 The evolution of the European population in absolute and relative terms

Evolution of world population in absolute terms The annual average growth rate of population of ESPON States over the period 1950-2000 is clearly among the lowest at the world scale but we do not observe any case of negative evolution of population. The lowest rates of population increase at the world scale (less than 0.4% /year) are observed in central Europe (Austria, Czech republic, Hungary, Bulgaria, Portugal) but the majority of ESPON States are rather characterised by a small increase of population growth

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(between 0.4% and 1.2% / year), which is comparable to the situation observed in Japan and former republics of Soviet Union (except central Asia). ESPON area is a part of a continuous area of low population increase (the “yellow banana”?) which covers all States located between Tokyo and Lisbon. Out of this central area of demographic weakness, we can identify a group of States with medium evolution of population at the world level (between 1.2 and 2.1% / year) which combines non-European industrialised States (USA, Canada, Australia, New Zealand, Chile, Argentina, Southern Korea, …) and the biggest countries of the Third World (China, India, Indonesia) which have developed policies of birth control. The highest levels of population growth concern the rest of the World and associate both emerging and underdeveloped countries which have experimented with some difference in timetable the demographic transition during the period 1950-2000. Evolution of world population in relative terms The evolution of the share of world population represented by each State in 1952 and 1998 provide a very different picture of the demographic recombination of the World during the last 50 years (map 8-3). Indeed, States which have increase their population in absolute terms but with a rate of increase lower than the world trend will necessarily experiment a reduction of their share at the world scale. For example, the share of France in world population has declined from 1.66% of world population in 1952 to 1.02% in 1998, which means a reduction of –0.64 pts, in terms of world demographic share (blue circle). In the same time, Turkey moved from 0.85% to 1.08% of the world population, which represents an increase of +0.23 pts in terms of world demographic share (red circle). Looking at the map 8-4 it is very clear that all States located in the ESPON territory are characterised by a dramatic reduction of their share of world population, but we can notice that it is also the case of Japan, Russia and China which are all characterised by a strong reduction of their share of world population during the period 1952-1998. The most important gains of world population share are firstly observed in India (where birth control was not as much strictly applied as in China) and more generally all States of southern Asia, Africa and Latin America (except for the southern part). This translation of the world gravity centre of population from north to south is a major feature with very important political and economical implications for Europe, especially if (as we will see in the next section) it is not followed by an equivalent translation of world economy.

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Map 8-3 : Annual average growth rate of population 1952-1998

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Map 8-4 : Difference between share of world population in 1952 and 1998

8.1.2.3 Typology of demographic evolution of world States (1952-1998)

The aim of the synthetic typology presented in map 8-5Erreur ! Source du renvoi introuvable. is to take into account the specificity of the demographic evolution of each State with a cluster analysis which takes into account all years of the period and not only the situation at the beginning and the end13.

13 The methodology used for this cluster analysis is euclidean distance weighted by population of states

after transformation values of population in index 100=1952

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Type A: Regular increase States from type A are characterised by a regular increase of their demographic weight in the World during the period 1950-2000. This situation is mainly determined by the fact that States of this category are at the core of their demographic transition, at the moment when mortality has strongly declined but fertility remains temporary at a high level, causing a very strong natural increase. In certain cases, this natural increase is reinforced by migratory attractiveness, producing cumulative effects as in the case of States with oil resources (Persian Gulf, Venezuela, Libya …). In the detail, it is possible to distinguish subtypes with exceptional increase (A.1), important increase (A.2) and medium increase with reduction of growth rate in the 1980’s (A.3). Type B: Global stability States from type B are characterised by a rate of population increase which is more or less equal to the world trend of the period 1950-2000, even if their demographic curve can be slightly different (with periods of lower or higher increase than the World). This situation is typical of new industrialised countries (Australia, Canada, Argentina, Southern Korea) which can balance their relative low level of natural increase by strong level of immigration. It can also be observed in the biggest countries of Third World which have developed a policy of birth control (India, China, Indonesia). And finally in some countries where a high level of natural increase is balanced by strong flows of out-migration toward other countries and peaks of mortality due to political or economic crisis (Angola, Ethiopia, Chad, Afghanistan, Argentina). In the detail, it is possible to distinguish a subtype B.1 more dynamic than subtype B.2. Type C: Regular decrease States from type C are characterised by the regular decline of their share in the world population, mainly due to their situation of post demographic transition (low fertility and low mortality) with ageing population and low proportion of young adults. According to this structural demographic situation, States from this category are not able to reach important rates of population, even if they are subjects to flows of in-migration. In the case of United States (type C.1), the demographic decline is relatively limited because the ageing of population is balanced by important and regular flows of young in-migrants. But in the case of European countries, Russia and Japan, the mean age of population is higher and the in-migration flows are able to balance the structural evolution. In this group, one can distinguish between countries with medium decrease of their share of world population (C.2) like France, Russia and Japan and countries with more important decrease. This last subtype (C.3) is characteristic from northern and

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central part of Europe (Sweden, Finland, Germany, Italy, Hungary, Austria, Czech Republic, Bulgaria) and also from UK and Portugal.

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Map 8-5 : Typology of demographic evolutions 1952-1998

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8.1.3 Economic evolution of world states 1952-1998

8.1.3.1 The evolution of the economic sizes of European States at world level

The distribution of the economic size of States during the period 1952-1998 appears more stable than the evolution of demographic size, even if some important changes can be pointed (Map 8-6 & 8-7) Very large States (G<1: more than 10% of world GDP ppps) The only State which remains “very large” during the whole period is United States of America which represents 27% (G=0.6) of world GDP in 1952 and 22% (G=0.7) in 1998. China which represented only 5% (G=1.3) of world GDP in 1952 has started to increase very quickly its share of world GDP after 1975 and can be considered actually as very large with 12% of world GDP (G=0.9). Large States (1<G<2: between 1% and 10% of world GDP ppps) In the 1950’s, the ESPON area accounted for 7 States which could be considered as “large” from economic point of view at world scale: Germany14, U.K., Italy, France, Spain, Netherlands and Poland. Despite a general reduction of their share of world economy, (except in the case of Spain), most of these States can always be considered as “large” at the world scale but Poland and Netherlands (around 1980) have decreased under the level of 1% of world GDP and have moved to the category of “medium” economic size. In Eastern Europe, the former Soviet Republics of Russia and Ukraine could be considered as economically “large” in the 1950’s but it remains true only for Russia. In the rest of the World, the list of economically “large States” has remained very stable (Japan, India, Indonesia, Australia, Mexico, Canada, Brazil), the only exceptions being Argentina (which left the group of “large” States at the beginning of the 1980’s), Turkey and Thailand (which joined the group of “large” States at the end of the 1980’s). Medium States (2<G<3: between 0.1% and 1% of world GDP ppps) The members of the European Union and the candidate or associated countries of the ESPON program are generally classified in the category of “medium” economic size at the world scale during the whole period 1952-1998. We do not observe the move towards the category of “small” States that was noticed for the demographic criteria.

14 Even if we take into account the geopolitical division of this period, western Germany represented more than 1% of world population in 1952 and could be considered as « large ».

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Small States (G>3: less than 0.1% of world GDP ppps) In 1998, 7 States from the ESPON area belongs to the category of ”small” economic size (Estonia, Latvia, Lithuania, Cyprus, Malta, Luxembourg, Slovenia) which is more or less the symmetric of the number of “large” States. The great diversity of economic and demographic sizes of neighbouring States is a major characteristic of the European territory which can not be observed at such degree in other parts of the World.

Map 8-6 : Share of the world GDP (ppp) in 1952

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Map 8-7 : Share of the world GDP (ppp) in 1998

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8.1.3.2 The evolution of the world GDP (ppps) in absolute and relative terms

Evolution of world GDP (ppps) in absolute terms According to the figures of Maddisson database the GDP expressed in constant US $ of 1990 (Geary-Khamis PPPs), has experimented a positive variation in all selected 168 countries of the World without exceptions during the period 1952-1998. To avoid any misunderstanding of Map 8-8, it is important to pay attention to the fact that:

• the evolution of the volume of GDP is not necessarily correlated to the evolution of the ratio of GDP per capita. If the growth of population is higher than the growth of GDP, the result is a decrease of economic well being.

• the evolution of GDP expressed in PPPs reflects the internal situation of States (corrected by level of prices) but not necessarily their international situation (i.e. their economic power on the global market) which is better described by GDP in current US $.

• the evolution of the GDP at the State level does not provide any information on potential inequalities in the social or territorial distribution inside each State .

Having this in mind, we can notice the high level of heterogeneity of the variation of GDP PPPs both at the world level and inside the subgroup of States belonging to the ESPON area. If we exclude the small States with exceptional increase (multiplication by 15 for Malta), the most positive variations in the ESPON area are observed for Mediterranean countries like Spain, Portugal or Greece and the less favourable for UK, Switzerland and new member countries or candidate countries of East-Central Europe (Czech and Slovak republic, Bulgaria, Romania, Hungary, …) Evolution of world GDP (ppps) in relative terms Looking at the map 8-9 it is clear that most States located in the ESPON territory (except above mentioned Mediterranean countries and Ireland) are characterised by a more or less important reduction of their share of world GDP PPPs. This reduction is generally less important than that observed for demographic criteria which means that, in practical terms, the level of GDP per capita has increased during the period 1952-1988 (see next section). The most important reduction of world economic share is observed for United Kingdom but should be cautiously interpreted because it is related at the same time to the long historical trend of decline of the British Empire and to the specific situation of world economy in the 1950’s. The economic situation of United Kingdom and United States of America at the end of the Second World War remained more favourable than that of

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Germany, France or Japan which had to rebuild a large part of their economic infrastructure destroyed by the war. This initial situation explains why reduction of the economic share is more important for these countries and also for States which did not participate to war like Switzerland and Sweden. In the case of Soviet Union and former socialist countries, the explanation is different and the strong reduction of world share of GDP took place mainly after 1989 during the economic collapse which was produced by the transition towards market economy. Economic crisis explains also the reduction of world share of GDP in Argentina. The States which benefit from the most important increase of their share of world GDP PPPs are concentrated in Eastern Asia (especially Japan, China and South Korea) but can be described more generally as a “golden ring” which involves all States located southern from Europe, United States and Russia: Mexico, Brazil, S.E Mediterranean, Middle East, south and east Asia, north of Oceania).

Map 8-8 : Annual average growth rate of GDP 1952-1998

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Map 8-9 : Difference between world share of GDP (ppps) in 1952 and 1998

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8.1.3.3 Typology of economic evolutionS of world States (1952-1998)

As in the previous case of demography, the aim of this synthetic typology is to evaluate the specificity of the economic evolutions of each State with a cluster analysis. To take into account all years of the period 1952-1998 appears very important because the economic evolutions are more complex than the demographic ones (Map 8-10). Type A: Growth followed by stability States from type A are characterised by a very important increase of their economy during a first period (1950-1975) where their rate of increase of GDP is much higher than the world trend. After the increase of oil prices and the beginning of world economic crisis, a first subgroup (A.1) was able to maintain a rate of economic development higher than the world trend, either because they benefit from the increase of oil prices (Libya, Saudi Arabia, …) or because they were able to adapt to a new economic situation (Japan, Thailand, Tai-Wan, South Korea). A second subgroup (A.2) suffers much more from economic crisis and, after an important increase in the 1970’s, turned to simple stabilisation of their world share of GDP: Brazil, Mexico, Spain, Turkey … Type B: Stability followed by growth States from type B are characterised by an opposite situation where the first period 1950-1975 was characterised by chaotic evolution of their economy, due to many political perturbations causing a rate of economic increase lower or equal to world trend. A first subgroup (type B.1) began to experiment an exponential economic growth since the 1970’s and reached the highest rate of growth at world scale in the 1990’s (China, Indonesia, Pakistan, Egypt). In another subgroup (type B.2), the same movement took place but ten years later and it is only after 1980 that they turned from decline to increase of their share of world economy (India, Vietnam, Chile, …). Type C: Regular decline States from type C are characterised by the regular decline of their share in the world economy, whatever their initial situation of economic development was. This group can combine very industrialised States where the relative decline of the share of world GDP is a simple consequence of the low rate of population increase. But it can also be observed in underdeveloped countries with a lack of any significant economic take-off. The subgroup C.1 concerns a group of States of Western Europe (France, Germany, Italy …) where a slow increase of world share of GDP was followed by a slow decline after economic crisis of 1975. The subgroup C.2 is rather characteristic from countries of Central Europe (Poland, Hungary, Sweden …) which followed a regular trend of economic growth lower

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than world trend. The subgroup C.3 is similar but with lower rate of increase and an important reduction of world economic share: it is observed only for United Kingdom in Europe. Type D: Stability and brutal decline after 1989 States from type D are mainly former republics of Soviet Union, or States which experimented war at the beginning of the 1990’s (Yugoslavia, Iraq). They are characterised by a relative stability of their world share of GDP until 1980 and a beginning of slow decline during the period 1980-1990, which is very similar to the evolution of previous type C.1. Their main characteristic is the exceptional decline of their GDP between 1990 and 1998, due either to economic collapse (consequence of market liberalisation) or to political crisis (war).

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Map 8-10 : Typology of economic evolution 1952-1998

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8.1.4 Synthetic typology of joint demographic and economic evolutions of world states 1952-1998

The separated analysis of demographic and economic dynamics which has been realised in previous sections did not take into account the joint effects of both criteria which combines at the same time the evolution of social cohesion (if we suppose that GDP/inh. is an approximate measure of the welfare of inhabitants) and the evolution of economic attractiveness (positive or negative evolution of GDP and population). As in previous sections, we use the global economic and demographic trend of the World between 1952 and 1998 as reference which means that we focus on relative situation and not on absolute situations of countries (map 8-11).

8.1.4.1 Group A: Positive divergence

The most favourable situation according to our criteria is the situation of States which have simultaneously increased their share of population and GDP at world scale but with a higher rate of increase for GDP than for population. The States belonging to this group (A) have simultaneously increased their demographic and economic sizes which make them attractive from an economic point of view because they represent a potential market of growing size. At the same time, they have increased the GDP/inh. at a higher level than in the rest of the World, which means that social welfare have potentially been improved. But this improvement of social welfare is only a potentiality and depends also strongly on the equal or unequal repartition of the benefits of economic growth between social groups and regions of the States belonging to this category. Two different types can be distinguished in this group A. Type A.1: Very strong economic growth associated with important demographic growth The group A is characteristic of States of small or medium economic and demographic size which have developed exceptional comparative advantage in the global market during the whole period 1952-1998, generally associated with a strong level of specialisation. This specialisation can be related either to the presence of precious mineral resources (Libya, Saudi Arabia, Qatar, Botswana) or to high level of foreign direct investments and industrial relocation in an initial context of low wages (Southern Korea, Taiwan, Thailand), or to the massive support of the economy by diasporas and allied countries (Israel). Most countries of this group are characterised by very high level of social inequalities and the existence of minorities or foreign workers excluded from the redistribution process. This type of exceptional growth concerns 13 States but a rather limited

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amount of world population (2.3% in 1952 and 3.0% in 1998) and world economy (1.2% in 1952 and 5.2% in 1998). Type A.2: Very strong economic growth after 1975 The group B is limited to 5 countries. It involves two demographic giants (China and Indonesia) and 3 very small States or territories (Mauritius, Equatorial Guinea, West Bank and Gaza). The main characteristic of this group is the very high level of economic growth after 1975, associated with a stabilisation or at least a reduction of the rate of demographic growth. The combination of both effects is a very important increase of GDP/inh during the 1980’s and the 1990’s. This group B represents more or less for a quarter of the world population during the whole period (25.1% in 1952 and 24.7% in 1998) but its share of world GDP has been multiplicated by two (6.4% in 1952 and 13.9% in 1998). Actually, the GDP/inh. of the States of this group is more or less half of the mean of the World.

8.1.4.2 Group B: Positive equilibrium

The group B is composed by States which have experienced a significant growth of their share of world population and GDP but without advantage for one criteria. It means that the ratio of GDP/inh. of these States has more or less followed the world trend. Accordingly, the States of this group are economically attractive because the size of their market is increasing and the social welfare of their inhabitants has followed the “mean” evolution of the World which means that their “social attractivity” has not changed positively or negatively during the period. This group of 34 countries is mainly located in the “golden ring” of countries located in southern periphery of the triad. It associates States of large size (Mexico, Brazil, Egypt, Turkey, Iran, Pakistan, Philippines or Malaysia) with small and medium States (Ecuador, Colombia, Algeria, Tunisia, Syria, Mongolia …). It can be noticed than some countries of equatorial Africa also belong of this group (Côte d’Ivoire, Kenya, Congo …). Between 1952 and 1998, this group of emerging and new industrialised countries has increased its share of world population from 11.3% to 16.2% and its share of world GDP from 7.4% to 11.3%.

8.1.4.3 Group C: « Golden decline »

The group C is characterised in the same time by a strong demographic decline and an increase or relative stability of GDP. We propose to call this very original situation “golden decline” because it characterises States where declining

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population are becoming more and more rich as compared to the world trend of GDP/inh. Type C.1: Japan’s variant of golden decline The most extreme example of this model of “golden decline” is provided by Japan which has multiplied by two its share of world GDP (3.4% in 1952 and 7.7% in 1998) while its share of world population was strongly reduced (3.3% in 1952 and 2.1% in 1998). As a result, the GDP/inh of Japan which was more or less equal to the world average in 1952 is actually 3.7 times greater! Type C.2: Europe’s variant of golden decline Another variant of the model of “golden decline” can be found in Europe where many States has experimented an important decline of their share of world population associated with a stability or very small decline of their share of world GDP. This situation is very frequent in western part of Europe (Spain, Portugal, Netherlands, Germany, Italy, Norway, Austria) but also in Balkans (Romania, Bulgaria, Greece…). This type C.2 is not observed out of Europe, except in the very particular case of Puerto Rico. The population of the 20 States of this type has experimented a severe decline at the world scale (10.5% in 1952 and 6.0% in 1998) but their GDP has been very few reduced (17.9% in 1952 and 15.9% in 1998). As a result, the GDP/inh of these States which was more or less the double of world average in 1952 is actually the triple.

8.1.4.4 Group D: Negative equilibrium

The group D defines States which have experienced a significant decline of their share of world population and GDP but without advantage for one criterion. It means that the ratio of GDP/inh. of these States has more or less followed the world trend as in the case of previous group B, but for opposite reasons. Accordingly, the States of this group D are less and less attractive because the size of their market is decreasing demographically and economically at the world scale. The States of this group are firstly United States, United Kingdom and former republics of soviet Union (Russia, Ukraine, Belarus …) and Warsaw Pact (Poland, Hungary, Czech and Slovak republics, …) for which one possible explanation of the low level of increase of GDP could be the expenses of armies (nuclear weapon, ships, …) during the cold war. This situation is also characteristic of States which did not participated to the Second World War and took benefit from their neutrality (Switzerland, Sweden) which explains their very high level of GDP in 1952 and their relative more important decline later. Despite its decline, this group of 20 States still represents a very significant part

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of the world GDP (46.7% in 1952 and 31.2% in 1998) and the world population (17.1% in 1952 and 11.2% in 1998).

8.1.4.5 Group E: Negative divergence

States from group E are characterised by the most critical situation which is an increase of their share of world population associated with a decrease of their share of world GDP, which implies that their GDP/inh. is growing more slowly than the world trend or eventually becomes negative. Two different types can be defined according to the level of divergence between economic and demographic trends. Type E.1: Small negative divergence or global stability An important group of States of medium and large size (Canada, India, Australia, Southern Africa, Nigeria, Peru, Vietnam, Bangladesh …) and some States of smaller size (Cameroon, Gabon, Venezuela…) presents the characteristics of small negative divergence which can recover in certain cases a perfect stability of the share of world population and GDP in other cases, small oscillations during the period 1952-1998. The 37 States of this group which has more or less followed the world trends is a significant part of world population (22.2% in 1952 and 26.8% in 1998) and world economy (12.3% in 1952 and 11.8% in 1998). Type E.2: High negative divergence with increasing poverty With this group of 36 States of small and medium size, except for some cases, we explore the most negative scenario of evolution which is exactly the contrary of the situation of “Golden decline” observed in group C. For many States from group E.2, the diverging evolution of GDP and population produces not only a lower rate of increase of GDP/inh. than in the rest of the World but and absolute and effective decline of economic conditions in absolute terms. In many cases the economic problems are reinforced by political crisis and wars (Afghanistan, Congo R.D., Sudan, Laos …) or by the action of international organisation which claim for structural reforms producing growing social poverty (Argentina, Chile …). The small size of most States of this group make very difficult any action of State and any policy of economic or political independency. In 1998, the 36 States from type E.2 counts for 10.0% of the world population (8.2% in 1952) with only 2.9% of world GDP (4.7% in 1952).

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Map 8-11 : Synthetic typology of demographic and economic evolution (1952-1998)

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8.1.5 Conclusion: the effect of political enlargement on the economic and demographic dynamic of the european union

In conclusion, we would like to underline that the fact to use the division of World between States for the analysis of territorial evolution of Europe is a strong limitation because it doesn’t take into account the regional dimension of the phenomena (region is understood here has division of the World) and the dynamic of political divisions. The evolution of population or GDP of the European Union between 1950 and 2004 is a very fascinating example of dynamic of political division because during the whole period we observe a structural trend of demographic and economical decline (figures 1 and 2) which is always balanced by a political dynamic of enlargement.

• The population of EU6 in 1950 was more or less equal to 6% of the World but would have declined to 3% in 2000 without enlargement. On the contrary, the share of world population located in the European Union has remained very stable around 6% when EU enlarged to 9, 10, 12 and 15 members. With the enlargement to 25 members in 2004, the share of world population located in the EU has reached an historical record of 7% and could jump to 8% with the adhesion of Romania, Bulgaria and Turkey between 2007 and 2015. In other words, demographic decline is not a fatality for European Union from a political point of view.

• The GDP of EU6 in 1950 was more or less equal to 15% but would have

declined to 10% in 2010 without further enlargement of the political union. The membership of United Kingdom in 1973 has produced a decisive increase of this share which reached 20% and remained very stable around this level when Europe enlarged to 10, 12, 15 or 25 members. But the trend to economic decline of the area remains important and it is only with further enlargement to countries like Turkey in 2015 that European Union can eventually maintain this share of 20% of world economy in the future.

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Figure 8-1 : Evolution of the share of world population of the European Union (1950-2020)

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Figure 8-2 : Evolution of the share of world GDP (ppps) of the European Union (1950-2020)

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8.2 Benchmarking of WUTS Regions and Macroregions.

Yann Richard, LADYSS

Alberto Vanolo, Grupo Soges Every comparison of regions in the world, i.e. clusters of states, should be embedded in a homogeneous statistical frame and should be based on an homogeneous method. The WUT system offers such an opportunity in providing the ESPON TPG with a unique and flexible territorial framework. In this part, this statistical tool will be largely used for the following indicators: GDP in constant US dollars (2000 prices) in value term and in percentage of the World Gross Product. GDP growth. GDP per capita (see Final Report – Volume 1 – Part A) and GDP per capita growth. Net FDI inflows in current US dollars (see Final Report – Volume 1 – Part A). These indicators are almost all related to economics. They have been chosen because they are among the most relevant ones to show the place and role of EU and ESPON 29 in the global space and in the globalisation process, which is mainly an economical process. Besides, thanks to the World Bank database, it was possible to base the following tables on historical series (from 1980 up to 2004 or 2003). Therefore, each region (each WUT) of the world can be replaced in an global, macroregional or regional context, but it can also be situated in relatively long tendencies. Taking into account the historical evolution is useful to bring more light and meaning to the actual hierarchies at different levels. For all these indicators, each table presented below is based on the World Bank database, which is entirely built on the same methodology. In almost all cases, the number of states taken into account is roughly the same that is between 162 and 167, in order to match roughly the number of 168 which was proposed in the second interim report (see SIR - Volume 1 – page 42). The number is always inferior to 168, which is due to inevitable data gaps. Some States (Myanmar, Cuba, North Korea…) do not regularly provide the World Bank with data, such as GDP, GDP per capita, FDI inflows etc… In some tables, it may happen that historical series are not complete for several states. At last, as all these data are extracted from the World Bank database, they never take into account Taiwan. This situation is explained by the fact that there is still no official acknowledgement of Taiwan by the United Nations.

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The globalization process is tightly combined with another one, which is called “regionalization” or “regional economic integration” at macro or regional levels (see Final Report – Volume 1 - Part C – Introduction). These expressions put the stress on increase of trade and financial flows between states all situated in the same region (clusters of states). This process can develop itself on a legal basis (free trade agreements, union customs, common markets…), or without any legal basis as it is the case in Eastern Asia where there is no such agreement at macro regional level yet (between Japan and China for instance). This process, largely described in the part C dedicated to the ensemble composed by ESPON and neighbourhood, must be taken into account when one makes comparisons between Europe and other regions in the world. ESPON is not only a territory for spatial planners. It is also an economic region where states are more and more interrelated. It must therefore be compared to other economic regions, which do not totally match the WUTS framework, except for NAFTA which perfectly corresponds to the WUTS 21 and 210. That is why this benchmarking part is divided into two subparts. The first one is based on the WUTS framework. It aims to complete the synthetic analysis provided in the first volume of the final report (part A). The second one is based on other clusters of states which will be defined and justified below. 8.2.1 Benchmarking the World on the WUTS base Concerning the distribution of GDP, the hierarchy between upper level WUTS brings no surprise, showing a clear domination of Americas, followed by Eurafrica and Asiapacifica (table 8-1). This hierarchy has been the same for several decades but it is likely to change in the nearest future. The surprise comes from the contrasts inside WUTS 1, 2 and 3. The gap between rich countries and poor ones is much more visible in the WUTS 1, especially between WUTS 11 and WUTS 13, than in other ones. One can see for example that the geographical distribution of production is much better balanced in Asiapacifica between WUTS 31 and 32. The gap is wider between WUTS 21 and 22, but the GDP of Latin America is much higher that that of WUTS 12 and 13.

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Table 8-1 : Distribution of GDP

Average annual GDP distributed in periods of five years (billions of constant US 2000 dollars) Source : World Bank World unified territorial system Size Code Name States 1980-84 1985-89 1990-94 1995-99 2000-04 W 0 WORLD 162 21636 24452 25382 28932 32338 W 1 EURAFRICA 110 6995 7998 9587 10605 11549 W11 Europe & Northern Asia 43 5633 6518 7798 8478 9479 W111 Western Europe 19 5406 6108 6901 7622 8488 W112 Eastern Europe & Northern Asia 24 226 410 896 856 990 W 12 Western Asia & Northern Africa 23 467 499 631 763 890 W 121 South & East Mediterranea 10 186 219 264 341 419 W 122 Middle East & Central Asia 13 280 279 367 422 471 W 13 Subsaharian Africa 44 213 239 263 299 344 W 131 Central Africa 7 21 25 22 23 26 W 132 Eastern Africa 11 23 29 34 41 50 W 133 Western Africa 15 47 52 61 71 82 W 134 Southern Africa 11 120 133 144 163 185 W 2 AMERICAS 29 7958 9378 10584 12509 14143 W 21 Northern America 3 6122 7330 8307 9783 11313 W 210 Northern America 3 6122 7330 8307 9783 11313 W 22 Latin America 26 917 1023 1138 1363 1415 W 221 Central America & Caribean 21 289 317 367 428 430 W 222 Southern America 5 627 700 724 934 984 W 3 ASIAPACIFICA 23 3506 4260 6237 7348 8279 W 31 Southern & Eastern Asia 13 - - 1027 1532 2034 W 311 Eastern Asia 2 - - 525 865 1219 W 312 Southern Asia 7 - - 389 515 644 W 313 South-East Asia 4 - - 113 150 170 W 32 Western Pacifica 10 3506 4260 5210 5816 6245 W 321 Western Pacifica 2 3084 3756 4586 5024 5334 W 322 South-Western Pacifica 5 172 208 294 391 444 W 323 Oceania 3 248 294 330 400 466

This hierarchy is not new. Things were roughly the same in the 1980s. What has changed is the size of discontinuities between WUTS. The gaps between WUTS have undergone significant evolutions. The contrasts between WUTS 1 and 2 and between WUTS 2 and 3 are wider than 25 years before. The evolution is the same between WUTS 1 and 3 is not the same. The increase of GDP has been more rapid in Asiapacifica than in Eurafrica since the 1980s. The former is much

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likely to overtake the latter in the current decade if this tendency goes on this way. This is due to a rapid and steady economic development in Eastern Asia. Comparisons at the lowest WUTS level show that Western Europe (WUTS 11) has maintained its second rank in the world production. But this positive assumption must be qualified. 1. The gap between Western Europe and other regions of Africa and Western or Central Asia has increased a lot. One can wonder if EU and ESPON can foster their own economic development on such a situation, being surrounded by poor or eventually extremely poor countries. 2. The gap between Western Europe and Northern America is wider the 25 years before. Whereas the average difference was only 500 billion dollars in the first period (1980-84), it has reached a 2.825 billion dollars level in the last period (2000-04). This shows that the economic growth has been much steadier in America than in Europe. All these conclusions are confirmed by the table which presents the share of each region in the World Gross Product (WGP) in percentage terms (table 8-2). This indicator is even more appropriate to show the tendencies followed by each WUTS. One can see the relative decline of Eurafrica and Americas in the global production, whereas the share of Asiapacifica is nothing less than spectacular. But the decline of Eurafrica is more dramatic than that of Americas. These geographical differences are more obvious at the third WUTS level (WUTS 11, 12 and so on). The decline of Northern America is not that dramatic (from 33,21% to 32,94%) and it is largely due to the fact that the countries of the WUTS 31 are not taken into account before 1990 (due to data gaps). On the contrary, the decline of WUTS 11 is more significant (from 30,57% to 27,92%), whereas WUTS 31 has gone up from 3,89% in 1990-94 to 5,44% in 2000-04.

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Table 8-2 : Distribution of GDP (in percentage of the world total). Average annual percentage distributed in periods of five years

World unified territorial system Size Code Name States

1980-84

1985-89 1990-94 1995-99 2000-04

W 0 WORLD 162 100 100 100 100 100 W 1 EURAFRICA 110 37,9 36,95 36,34 34,86 35,03 W11 Europe & Northern Asia 43 30,57 30,16 29,61 27,92 27,92 W111 Western Europe 19 29,34 28,3 26,2 25,09 25,08 W112 Eastern Europe & Northern Asia 24 1,23 1,87 3,42 2,82 2,83 W 12 Western Asia & Northern Africa 23 2,54 2,32 2,39 2,51 2,57 W 121 South & East Mediterranea 10 1,01 1,02 1 1,12 1,2 W 122 Middle East & Central Asia 13 1,53 1,3 1,39 1,39 1,38 W 13 Subsaharian Africa 44 1,12 1,07 0,97 0,96 0,98 W 131 Central Africa 7 0,12 0,12 0,09 0,08 0,08 W 132 Eastern Africa 11 0,13 0,14 0,13 0,14 0,14 W 133 Western Africa 15 0,26 0,24 0,23 0,24 0,24 W 134 Southern Africa 11 0,62 0,58 0,52 0,51 0,52 W 2 AMERICAS 29 43,21 43,48 40,17 41,18 41,37 W 21 Northern America 3 33,21 33,96 31,51 32,17 32,94 W 210 Northern America 3 33,21 33,96 31,51 32,17 32,94 W 22 Latin America 26 5 4,76 4,33 4,5 4,21 W 221 Central America & Caribean 21 1,59 1,49 1,39 1,43 1,3 W 222 Southern America 5 3,41 3,28 2,94 3,08 2,91 W 3 ASIAPACIFICA 23 18,89 19,57 23,48 23,96 23,6 W 31 Southern & Eastern Asia 13 - - 3,89 5,03 5,44 W 311 Eastern Asia 2 - - 1,98 2,84 3,24 W 312 Southern Asia 7 - - 1,48 1,69 1,74 W 313 South-East Asia 4 - - 0,43 0,5 0,46 W 32 Western Pacifica 10 18,89 19,57 19,59 18,93 18,16 W 321 Western Pacifica 2 16,73 17,38 17,41 16,55 15,79 W 322 South-Western Pacifica 5 0,8 0,81 0,92 1,04 1,01 W 323 Oceania 3 1,36 1,38 1,27 1,33 1,36

Source: World Bank What happens at the lowest WUTS level? Western Europe has lost more than 4 points of percentage whereas Northern America has almost maintained its share in the WGP. Only a few regions have significantly increased their part in the World total: Eastern Europe and Northern Europe (WUTS 112) and Eastern Asia (WUTS 311 that is to say mainly China). In the same time, some contrasts between WUTS of third and fourth levels have been reduced. In Eurafrica for

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example, the gaps between WUTS 111 and 112 is less wide than in 1980, but the situation of subsaharian Africa remains disastrous. Whereas Eastern Europe has apparently taken advantage from the outbreak of economic structural reforms, the situation of Africa does not show steady signs of improvements. The analysis of the average annual evolution of GDP partly confirms what is said above. The rhythm of the economic growth has been superior to the World average in Eurafrica only in the last period, and it has been always lower before: 2.39 % per year in WUTS 1 in 1980-2004, and 3.4 % for the World average. The conclusions are the same at lower levels, for WUTS 11 (only 2.16 %, due to the economic crisis which followed the collapse of the soviet and socialist block in Central and Eastern Europe) and WUTS 12 (1.83 %). In the same time, the regions composing Americas have shown a more regular growth without any negative evolution throughout the whole period. The most rapid rhythm is the privilege of Southern and Eastern Asia, where average economic growth has been systematically superior to the world average: 4.8 % for the WUTS 3 and 5.7 % for WUTS 31. 8.2.2 What about ESPON and other economic macroregions In order to match the so-called process of regionalization, the WUTS framework is not sufficient and ESPON, considered as an economic integrated whole, must be compared to other economic regions. These regions have already reached a high level of integration, based on various patterns. Others are on their way to higher and higher integration. The delimitation of these clusters of states is based on the level of intraregional trade, or its evolution, and on the importance of intraregional FDI flows. In some cases, the existence of legal base (free trade agreement etc) has been taken into account but not necessarily. For example: Eastern Asia and ASEAN have been included in the same whole: there is not such agreement involving all the states of this region yet, but the intraregional trade and financial flows are growing fast. In almost all graphs, Latin America (without Mexico and Caribbean) has been chosen and not Mercosur. Such a choice is based on the increase of intraregional trade at all Latin American level and on a step by step process of enlargement of Mecosur: almost all the countries of South America are nowadays more or less directly linked to Mercosur with various status. The graphs below show a process of relative decline of EU 15 and ESPON compared to other economic macroregions. The increase of GDP in NAFTA has always been more rapid than in ESPON, EU 15 and even in the Monetary Union. Besides, nothing less than alarming, it appears that ESPON and EU 15 were already overtaken by the macroregion composed by Eastern Asia and ASEAN in 1987! This confirms the idea of a shift of the centre of gravity of the World

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economy from the Atlantic region to the Pacific Rim. In addition, it is clear that ESPON has not only been overtaken in absolute terms, but also in relative terms, losing almost 5 points of percentage. Over the same period, NAFTA has slightly increased its share and Eastern Asia (that is to says Eastern Asia + ASEAN) has gained a bit more than 5 points.

Figure 8-3 : Evolution of GDP

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the same, almost keeping the contact with the performances of NAFTA and widening the gap with Eastern Asia. This process is partly due to the lack of demographic vitality of Europe. This idea is confirmed by the fourth graph. It shows than the annual growth of GDP in ESPON and Euro Monetary Union has always been dramatically inferior to that of Eastern Asia since the 1970s. Nonetheless, the gap between both regions has widened.

Figure 8-5 : Evolution of GDP per capita

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On the contrary, the place of EU 15 and ESPON at first location of FDI stock in the world has been more than confirmed since the 1980, either in absolute or in relative terms. The gap between EU and other regions has been widening more and more rapidly since the 1990s. This confirms several ideas. The attractiveness of EU for investors is still very high. The economies of EU and ESPON are much more engaged in the financial globalization than others, even if a large part of this FDI stock comes from Western Europe. These graphs confirm what is said in the first volume of the final report about the geography of foreign investment flows. Reversely, graphs dedicated to the FDI outward stock would show that EU is definitely the first investor in the World, far before the United States and Asian countries.

Figure 8-7 : Evolution of inward FDI stock in various regions

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9 ACCESSIBILITY THEMATIC ANALYSIS

9.1 Distance proximity to ESPON 29

The attempt to delimitate a so-called ”ESPON Influence Area” can be based on a first group of indicators which are related to the general concept of ”proximity”. What we try to identify here is not the actual flows but the various factors which can make easier the relations between the countries of the World and the 29 countries of the ESPON. In other words, we focus of potentialities of relations based on ”hard facts” which are not likely to change in a near future and which are strategic realities for long term political decisions. The most obvious reality is the physical distance between each country of the World and ESPON 29. Whatever the mode of transportation, physical distance is necessarily related to a time or a cost which limits the interactions and the flows. Of course, the correlation is never perfect and it can happen that the cost or time for a travel at 6.000 km is lower than the cost or time for a travel at 2.000 km, but the technical and economic conditions can change and, on the long term, physical distance remains always strongly correlated with functional distances. Furthermore, many crucial phenomena are really related to physical distance and not to network distance: it is sufficient to keep in mind the accident of Chernobyl or the actual diffusion of new virus of H5N1 bird's flu to be convinced that many diffusion process are directly related to ”bird fly distance” and not to networks . Last but not least, we can notice that physical distance is not only a material reality but also a mental one, as it is associated to visual proximity on the maps which are observed and learned by students all around the world. The measure of physical distance between states is based on the database of CEPII15 which propose an estimation of distance between main urban centres of each couple of states, weighted by their population. This measure is much more precise than the usual distance between capitals or conventional centroïds of territories and can be considered as a good approximation or mean distance between inhabitants of different states. Notice that this distance is not equal to 0 inside a state but is a measure of mean internal distance between inhabitants of the country. To obtain a measure of distance to ESPON29, we have computed for each state of the world the mean of its 29 distance to the ESPON members. We did not weight results (by population or GDP of the ESPON countries) as we had no

15 http://www.cepii.fr/anglaisgraph/bdd/distances.htm

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reason to choose a particular criterion. Among the 168 countries of our database, the largest distance to ESPON29 are obtained by New Zealand (18.000 km), Fiji (16.200 km) and Australia (15.700km) and the minimal distance by Czech Republic (990 km), Austria (1.010 km) and Germany (1.030 km). It is interesting to notice that this distance can be higher for ESPON countries like Portugal (2.260 km) or Cyprus (2.400 km) than for non ESPON countries like Turkey (2.020 km), Moldova (1.490 km) or Tunisia (1.800 km). As our purpose is to combined various criteria of proximity which are both qualitative and quantitative, it is necessary to transform all of them in dummy variables (0/1) which can be further associated in an homogeneous table for statistical synthesis. In the case of distance, we decided therefore to establish four dummy variables indicating if the mean distance to ESPON 29 is lower than 1.500, 3.000, 4.500 and 6.000 km. We obtain therefore an implicit distance score which is ranking from 4 (for states located at less than 1.500 km from ESPON 29) to 0 (for states locate at more than 6.000 km from ESPON29).

Map 9-1 : Distance score

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The statistical breakdowns have been chosen in order to fit as much as possible with concrete facts. We can see on Map 9-1 that the maximum distance score defines the geographical core of ESPON29 area, excluding only most peripheral ESPON countries (Ireland, Spain, Portugal, Greece, …) but including some non ESPON members (Balkans, Moldavia, Belarus). The distance score 3 defines clearly the European Neighbourhood, including both eastern and western peripheries of ESPON area. Lower distance scores (1 and 2) are associated to most remote regions of Sahara and Central Asia which are clearly located on the margins of the ESPON space but can nevertheless remain important for political action on many subjects (migrations, security…). We considered as not necessary to distinguish further classes of distance after 6.000 km and we can notices that this threshold of distance is often related to major barriers like Atlantic Ocean or Himalaya mountains. 9.1.1 Common borders and maritim neighbourhood with ESPON 29 The countries which are located at a short distance from ESPON can be differentiated according to the fact that they share or do not share a common terrestrial or maritime border with ESPON countries. For example, Bosnia and Herzegovina is very near from all ESPON countries according to distance (1.190 km) but do not have any common terrestrial border with ESPON member states. On the contrary, Brazil is located in average at a very long distance from ESPON countries (9.500 km) but shares a long terrestrial common border with French Guyana which is a piece of France and therefore of European Union and ESPON. Common borders are strong material and symbolic realities which can not be confused with distance, even if it is partly correlated. The problem with this criterion of contiguity is the difficulty to measure it because different solutions are possible. Concerning the existence of terrestrial borders, the database from CEPII which has been used here does not mention some borders like the very symbolic one between Morocco and Spain around Ceuta and Melilla. This omission could probably be explained by the small length of this terrestrial border, but it is a full reality from juridical point of view. The poor migrants who risk their life to cross this golden curtain are perfectly aware of the fact that it is a limit of European Union which provides rights to the happy few which succeed in their attempt. The borders of ESPON should be considered as potential or active political interface and not only as barriers dedicated to the control of external flows. That is the reason why we decided to extend the concept of terrestrial contiguity proposed by the CEPII to the case of states separated by a short maritime distance which can be easily crossed by official or non-official flows. We obtain therefore a differentiated score of contiguity equal to 2 for common terrestrial borders and to 1 for short maritime distance borders (Map 9-2).

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Map 9-2 : Contiguity score

9.1.2 Colonial relations as factor of proximity with ESPON 29 The analysis of borders completes nicely the measure of proximity based on distance. But it has to be completed by an historical dimension because borders are changing through time. In the case of Europe, it is especially important to take into account this historical dimension as European people has dominated, at less for a while, most part of the World during the period of great expansion of the 15th-19th centuries. Thanks to the CEPII database, it is possible to measure for each couple of states in the world if they have been in historical relationships (mainly colonial) during the last 4 centuries and/or if they were always in colonial relationship in the more recent period (1945). An aggregation of the matrix of colonial relationships of the CEPII has been realised in order to measure for each state of the world if they have been in colonial relationships with at less one of the 29 states of ESPON, both in the long term and in the recent period. We obtain therefore a score of colonial proximity which can reach the values 0, 1 or 2 according to the fact that: the state was never in colonial relation with Europe (0); the state has been in colonial relation with Europe in the past but obtained its independency before 1945 (1); the state was still in colonial relation with

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Europe in 1945 (2). Note that colonial relations are not always directed from ESPON states to the rest of the world and that, in the case of Russia and Turkey, it is precisely the reverse situation which explains their high scores of historical proximity. The resulting map 9-3 indicates clearly that this historical factor remains an important factor of ESPON influence in the world, even if – according to CEPII – we can observe an important group of states located on a diagonal from Ethiopia and Arabia to China and Japan which has never been colonial relation with ESPON countries. This result should be considered as preliminary and probably questionable as colonial relations are not the only modality of historical contact between countries. We can for example be surprised that the CEPII database does not mention any relations between Belarus and Ukraine on the one hand, and Poland or Lithuania on the other hand as they belong to common political construction in modern age. We can more generally consider that the focus on colonial relations is not sufficient to provide a perfect picture of relations between states in the past. If we have considered former commercial relation like “Silk road” we would probably not have obtained such lack of relations between Europe and central and eastern Asia.

Map 9-3 : Colonial score

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9.1.3 Common language as factor of potential interactions with

ESPON 29 One major output of colonial relations developed between European countries and the rest of the world has been the diffusion of European languages, especially English, French, Spanish and Portuguese, in many other countries of the world where these languages can be the official ones or, at least, can remain spoken by an important part of the population. Whatever the criteria of interaction between states (migration, trade, culture…) is, a common language is a very precious advantage in international competition or, simply, for the development of partnerships and better understanding. Thanks one more time to the CEPII database which has established two matrixes of linguistic proximity between states of the world. The first one is based on the existence of a common official language which can produce multiple links as some states has several official language. For example, Cameroon has two official languages (French and English) which means potential connexions with 7 ESPON states which are officially speaking French (France, Belgium, Luxembourg, Switzerland) or English (UK, Ireland, Malta). The second criterion is based on common communication languages, official or not, which are identified by CEPII on the criteria to be spoken by at less 20% of the population. The CEPII consider here that two countries are potentially able to interact as long as they share at least one communication language. By aggregating the CEPII matrix, we have established a matrix of linguistic proximity between all countries of the world and ESPON members, following the same principle as for historical relations and ranking from 0 (no common language, official or not, with ESPON countries) to 2 (existence of at least one common official language and one communication language with ESPON countries). The resulting map is interesting as it reveals a large diffusion of European language all above the world except in Asia and Middle-East. But one more time, the results should be cautiously interpreted and some limits of the database should be pointed. For example, the language identified in Belarus and Ukraine are considered as different from language spoken in other ESPON countries but this result underestimate the great proximity between slave language and the fact that people from Poland or Slovakia can generally easily understand the dialects spoken in western parts of Belarus or Ukraine. We can also ask – despite the fact that it is not a politically correct question – if Russian language is really not spoken by minimum 20% of population in some new member states, especially Baltic countries. We could also consider that the aggregation of China, Hong-Kong and Macau in the same political units lead to a false conclusion concerning the lack of common language with Europe. It is certainly true that less than 20% of Chinese are speaking English. But it is certainly also true that more than 50% are speaking English in

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Hong-Kong or Macau and that this language is commonly used in western cities like Chang-Haï.

Map 9-4 : linguistic score

9.2 Typology of ESPON countries, according to the air and trade flows

9.2.1 Methodology

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Both typologies have been realized on the basis of a similar methodology. The data basis of the classification is a flow matrix of 29 ESPON countries x 168 countries of the world. Since it is difficult to classify countries on a so disparate basis, we transform this matrix into a 29 ESPON countries x 17 WUTS3 world regions matrix, which gives a more stable result. However, it is true to say that the geographical divisions we choose a priori does have a significant impact on our classification. Our indicator is the share of each WUTS 3 region in the trade or airflow of each ESPON country, excluding the relations inside the ESPON area. We thus only evaluate the geographical orientation outside the ESPON space. However, the interpretation of such a classification is different whether the ESPON space represents a very high share of the air and trade flows: for some countries, extra-ESPON flows are so weak that the geographical orientation is not very significant. The classification has been realized with a hierarchical ascendant cluster analysis with the Ward method. This method allows to avoid the classical problem of these kinds of cluster analysis, that is to say the formation of a very big group with an average profile. The number of types is a compromise between readability and richness of the information, since the loss of variance for each grouping does not present big gaps that could allow to choose on a more objective basis. 9.2.2 The typology of ESPON countries on the trade flows The typology on the geographical orientation of trade flows of ESPON countries includes six types. The point of departure is a seven groups typology, where Malta forms a group in itself. This peculiarity is related to strong relations with Singapore. This is anecdotic and we opted to include Malta in the nearest group, that is to say, the south-western type (type 4). The type 1 is the more American-oriented one, if we exclude the very marginal type 3. It includes United Kingdom, Netherlands, Germany, Sweden, Switzerland and Austria. The trade with Eastern Asia is also specific of this type. Slightly less important, the type 4 groups south-western countries and Belgium. We find here a strong specificity of the trade with Africa, Middle-East and Southern America. On the other side, eastern Europe and Eastern Asia does not count much for this type. Types 5 and 6 group new member states of central and Eastern Europe, which distinguish by the weight Eastern Europe in their trade (non ESPON Eastern

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Europe, that is to say mainly Russia). For the type 6, the share of Eastern Europe is twice than for the type 5 : it includes Bulgaria, Slovakia, Lithuania, and Latvia still very linked to ex-USSR, as well as Slovenia, which keeps links with the rest of ex-Yugoslavia. Type 2 only includes Greece and Finland, whose trade with Eastern Europe is still more than 20 % (less than types 5 and 6) : the second one with Russia, while Greece has strong relations with neighbouring countries (Albania, Yugoslavia). Type 3 only includes Ireland, Norway and Luxemburg, whose trade is very northern-America-oriented : Ireland has become a workshop country which attract high US investments, while Norway exports a significant part of its oil to USA. 9.2.3 The typology of ESPON countries on the airflows This typology gives a different picture of the geographical orientation of the relations between ESPON countries and the rest of the world. We underline first that Luxemburg and Slovakia have not been considered, since all their airflows are oriented inside the ESPON space. We also begin with a seven group’s typology, and we then choose to put malta and Cyprus in the same group than Greece and Czech Republic, all countries characterized by the importance of relations with Middle-East and Northern Africa. Type 1 includes United Kingdom, France, Belgium, Italy, Netherlands and Poland. They distinguish by the weight of their relations with Northern America. Only type 3 (Ireland and Norway) has a higher proportion of relations with Northern America, but with a very weak volume. Type 2 is the second major type: it includes Germany, Sweden, Finland, Switzerland and Austria. Relations with Eastern Europe are the most specific ones, with a similar share to the links with Northern America. Type 4 groups both countries of Iberia peninsula, which have strong relations with Latin America. Finally, type 6 has nearly sole relations with the rest of Eastern Europe, mainly Russia and ex-Yugoslavia: it includes Bulgaria, Romania, Baltic countries and Slovenia.

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9.2.4 Conclusion We find in both classifications strong similarities: Eastern ESPON countries which keep strong relations with ex-USSR and ex-Yugoslavia; inside these Eastern countries, central eastern countries distinguish by the lower weight of the ex big soviet brother; the Iberia peninsula keeps strong relations with Latin America; some countries are characterized by the importance of the relations with Northern America (United Kingdom, Ireland, Norway).

Map 9-5 : typology of European countries on the basis of airflows

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Figure 9-1 : Share of different WUTS in the extra-espon airflows of the groups of country

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Map 9-6 : Typology of European countries based on the trade flows

Figure 9-2 : Share of different WUTS in the extra-espon trade of the groups of country

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10 ENVIRONMENT THEMATIC ANALYSIS

10.1 Romania : future eastern EU border environmental Challenges

Danel CONDORACHI

TIGRIS The attempt to make a brief presentation of these challenges can make one overpass aspects that may be important later, when we envisage these problems from a systemic point of view. However, as far as we can foresee, we will sketch the most important ones. There is no specific order or classification, just a mere presentation of them. 10.1.1 EU’s border security. This is a major issue because the migration pressure may increase from eastern European countries (Moldova, Ukraine, all other European countries of former USSR) and from Middle East and Asia. The causes are mostly economic (income opportunities, illegal work, generous asylum system, etc) but also political. The Romanian EU future border is presently under an elaborate reform but still has to undergo enhancements regarding technical infrastructure, policies and regulations for reducing human smuggling and illegal immigration which tend to be more and more ingenious. This study outlines some examples of routes frequently used for people smuggling. Migrants from Asia mainly use the route via Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan to Russia and from there, via Ukraine, Slovakia and the Czech Republic, to western European countries or even further to the United States and Canada. At the same time, the Balkan route from Asian countries via Iran and Turkey and from there, via Balkan states, to Western Europe is used for the smuggling of migrants as well as illegal goods such as drugs, firearms, etc. It is currently estimated that at least 10% of all the migrants who arrive in the member States do so through the Balkans. This extensive use of many of the Balkan countries to enter the European Union is an issue that should be monitored very closely, particularly in light of the fact that some of these countries will become part of the European Union in a near future (EUROPOL).

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On the other hand, it is necessary to develop specific measures for checking and banning “official” hazardous transports viewed as “harmless” exports from or into EU (nuclear or chemical wastes, precursors, byproducts, biological materials, narcotics, other goods etc) that may lead to import or export insecurity, public annoyance etc. 10.1.2 Air quality. European regulations for air quality have been improved. The newcomers in EU and their eastern neighbors have to respect these regulations and directives for a longer period of time due to their need of industrial facilities modernization, energy efficient technologies implementation, etc. Former soviet European countries are largely dependant from Russian Federation for their fossil fuels imports and for their attempt to overcome their last decades’ economic decline will continue to stick for some time to their inherited technologies. Switching to cleaner fuels like natural gas will increase their dependence from Russia. Alternate energy sources will be delayed due to their financial problems (or difficulties in acceding international credits or funds) in order to make huge investments like in nuclear energy or ecological solutions (hydroelectric, solar, wind, hydrogen, etc). Thus, the pollution of the air is still worrying, especially in urban areas and industrial platforms. Industrial decline has caused a substantial reduction in emissions of chemicals in many European countries of former Soviet Union. But air quality has not improved that much in most cities. The main reasons are the very sharp growth of private cars (in Moscow, for example, the number has doubled in the last few years) and the poor quality of the domestically produced petrol they use. Enterprises also pay practically no attention to environmental protection measures in the current economic hardships. Their purification equipment is often obsolete and they often cannot afford to replace it. 10.1.3 Pesticides. The production and use of pesticides in Eastern European countries increased since the 1960s and their use peaked in the second half of the 1980s. They became too expensive in practically all countries of the region with the onset of economic reforms. But fortunately, their use is now gradually decreasing. Nevertheless, pesticide concentrations in soils remain high in many places. A selective review of soils in the spring of 1994 by Russia's State Committee on Land Resources showed that about 9.4 % of samples were polluted with pesticides above safety levels. The situation in the Aral Sea basin is very serious:

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the Uzbek Ministry of Nature Protection reports that concentrations of pesticides in this area's surface fresh waters on average exceed safety norms more than five times. Socialist, collective agriculture required large, homogeneous fields which could be cultivated by large machines. Pesticides were mainly applied from the air, which often meant they were widely spread. Soil in the fields of Uzbekistan, for example, was quite commonly contaminated by DDT and other chlorine-containing pesticides at levels 100 to 300 times the MPC. The maximum, in the Termez region, was 4,800 times the MPC. Concentrations in soil in fields used for agricultural planes exceeded the MPC level by 25,000 to 30,000 times. Recently these concentrations have gradually decreased. In Moldova, also in Ukraine noteworthy is that, in the recent years, chemical fertilizers use has been substantially reduced. There is little monitoring of large-scale ecosystem impacts of pesticides in the Republic of Moldova and recently a special monitoring program was set up, which needs financial and technical assistance. Specialized places for storing and processing pesticides on collective farms were very rare. Often, they did not even have a primitive roof. In many countries old pesticides present a very serious problem. The Ministry of Environmental Protection of Ukraine says there are about 10,700 tons of them on farms, while Russia has about 40,000 tons spread throughout the country (an amount roughly equal to the chemical weapons stored there) and there are thousands of tons in Azerbaijan, the Central Asian Republics, Moldova and elsewhere. They are usually stored in very poor conditions. There are simply no facilities to transport or use them safely and they often penetrate to groundwater, causing serious contamination. 10.1.4 Wastes. The mountains of solid wastes and lakes of liquid ones, near most heavy industrial plants in Moldova, Ukraine, Russia, Kazakhstan and other countries are probably the most visible environmental legacy of the former system. Storing wastes in open ponds or on the ground (with practically no protection against percolation) was common. Ukraine's extremely serious problems exemplify the situation for every country of the former Soviet Union. Its Ministry of Environmental Protection reports that about 4 billion tons of toxic wastes - containing high concentrations of mercury, cadmium, lead, copper, nickel, vanadium and other heavy metals - have already

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been accumulated there. They are often stored in absolutely inadequate conditions. In many places, especially in the east of the country, aquifers are already contaminated and inadequate for water supply. The country produces about 100 million tons of toxic waste a year. Although the output of metallurgical and chemical industries was cut by about a half between 1992 and 1994, their generation of toxic waste fell by only 25 to 30 per cent. As industry declined, the recycling of toxic wastes also fell down: in 1994 it reached only 41.3 per cent of its 1990 level. The Azerbaijan Government reports that 97 % of waste goes to dumping sites with practically no groundwater protection. Often toxic wastes are dumped at sites designed for domestic rubbish. There is practically no control. Meanwhile in Uzbekistan, its Government adds that more than 2 billion tons of wastes have been accumulated in dumping sites (1.3 billion tons from the mining industry). These wastes often contain high concentrations of heavy metals, such as lead, mercury, cadmium, arsenic, nickel, zinc and copper amongst many others. Practically none of these sites are ecologically safe: leakages and the percolation of pollutants are observed everywhere. The list could be endless, including all countries of the region. The situation is very serious in many parts of Russia (Urals, the Moscow region, Kuzbass, to name just a few), Kazakhstan, and practically everywhere throughout Eastern Europe (after Ruben Mnatsakanian, Budapest). 10.1.5 Radioactive waste. There is an 11 ha radioactive waste disposal site at the special Centre for Radioactive Waste in the eastern part of Chisinau (Republic of Moldova). Only low and medium-level wastes need to be decommissioned, causing no special problems. A significant increase in waste generation appears between 1980 and 1985 for Co-60 (factor of 7) and C-14 (factor of 5). Between 1985 and 1990, a significant increase was registered: by a factor of 3 for Sr-90, by a factor of 6 for Cs-137 and by a factor of 8 for Pu-239. There is a gradual significant decrease over the whole period only for Ra-228 and Tl-204 (Source: UNDP Moldova 1993 - Studies carried out by Moldavian consultants). Nuclear power is an important part of the energy complex of Ukraine. At present, nuclear energy output equals 75,239 million kilowatt-hours, which is more than 43 % of the total energy production. 14 energy units are in use in 5 nuclear power stations (NPS). 4 units at Rivenska NP and Khmelnitska NPS are under construction. 2 energy units at Chernobyl NPS (units n° 1 and n° 2) are being

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prepared for shutdown. Chernobyl NPS (‘Ukrittia’), uranium or mining and processing enterprises close to Zhovti Vody and research reactors in Kyiv and Sevastopol are under constant surveillance. Ukraine does not have any national or regional storage for spent nuclear fuel, except one storage place near the Chernobyl NPS. Spent nuclear fuel from an NPs with VVER-type reactors is transported to Russia for recycling and burial. Work for the construction of storage facilities for spent nuclear fuel has begun at Zaporizhska NPS. A complex program of solving Ukrainian NPS nuclear fuel cycle problems is being prepared. A major part of this program is dedicated to RW problems (source: UNEP). For Ukraine, the nuclear accident in Chernobyl (1986) and its effects throughout Europe are already famous and need no further comment. Financial aid for Ukraine for non-nuclear energy alternative is also well-known as well as logistics for neutralizing the damaged facility. There is no organized disposal site for hazardous industrial and chemical waste. Most toxic industrial wastes are stored on industrial sites while awaiting a solution. Currently, only 5% of the industrial wastes generated annually are sent to proper disposal sites. Three quarters are dumped informally on communal tips, mixed with municipal wastes. Surface water and groundwater have been polluted to an unknown level. There are many concerns over illegal and uncontrolled dumping of both municipal solid waste and industrial wastes at numerous locations (R. of Moldova, Department for Statistics, 1997). 10.1.6 Oil. Pollution by oil and its products by the Soviet/Russian oil industry is a permanent disaster. The majority of pipelines were built in the 1970s and 1980s, in a great rush, in permafrost or acid peat soils in east Siberia, and they very frequently corrode and discharge oil. Only major incidents (like last year's disaster in the Komi Republic) attract international attention, but smaller leakages are very common. There are about 60,000 minor leaks from Russian pipelines every year, and the annual loss of oil and oil products is estimated to reach at least 3.5 per cent of total extraction. In eastern Siberia alone, according to the estimates of the Security Council of the Russian Federation, the leaks reach between 3 and 10 million tons of crude oil each year. Arctic ecosystems have very little ability to purify themselves; so oil, heavy metals, radionuclides and other pollutants remain for decades if not centuries.

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Oil pollution of the seas, especially in the Arctic, also reaches high levels. The Barents and Kara seas are heavily polluted as a result of many violations of technical rules during extraction and transport. As an example, 10 % of the bottom sediments of the Ob estuary, where sturgeons used to winter, are now made up of heavy fractions of oil. The situation is not much better in Azerbaijan: bottom sediments in Baku Bay, its Government reports, are extremely polluted. 10.1.7 Chemical weapons. Appalling facts on the production and storage of chemical weapons in Russia (kept absolutely secret during Soviet times) have recently become known. Seven factories produced chemical weapons in five cities - Berezniki, Chapaevsk, Dzherzhinsk, Volgograd and Novocheboksarsk. The last four are located on the banks of the Volga river which is Europe's largest river and the source of drinking water for millions of persons. Production, testing and storage of chemical weapons were accompanied by numerous violations of safety rules. In 1990-1992 - before it signed the International Convention on Chemical Weapons - Russia announced that it had 40,000 tons of poisonous substances, including 32,000 tons of phosphorous-organic compounds. The problem of how to destroy the weapons is still unresolved because public protests have blocked the use of a specially designed factory at Shikhany, near Saratov, also located on the banks of the Volga. In the past, large quantities were commonly dumped in the sea. Data collected by L. A. Fedorov, in his 1995 book (Undeclared Chemical War in Russia: Politics against Ecology), shows that the dumping took place in hundreds of locations in the Baltic Sea, Black Sea, Barents Sea, Kara Sea, White Sea, Sea of Japan, Sea of Okhotsk, and probably others to. He also produced some evidence that chemical weapons were buried in rivers and peat bogs throughout Russia. 10.1.8 Rocket fuel. The Soviet and Russian industries produce an extremely toxic substance - non-symmetric methylhydrazine – to be used as a liquid rocket fuel. Like chemical weapons, this substance belongs to the first class of toxicity. During the course of a launch, unspent fuel enters the atmosphere with discarded sections of rocket. Considering that there were thousands of launches in the former USSR and Russia, pollution of vast territories in the Archangelsk region, in Gorny Altai and in Yakutia is now a serious problem, according to Prof. Alexei Yablokov, head of the Interagency Committee on Ecological Security of Russia.

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At present, there are about 200,000 tons of rocket fuel in store in different facilities in Russia, that is five times the amount of chemical weapons. Production, storage, transportation and utilization of fuel may have serious ecological consequences, as yet barely known to the public. For example, according to an unofficial source, the mysterious death of more than 2 million starfish and thousands of other species in the White Sea in 1990 is linked with an unsuccessful rocket launch from a submarine. The rocket was destroyed and fuel entered the sea with devastating ecological consequences. The official commission that investigated the case immediately after the incident said that the causes of the deaths were 'not known'. In addition, we can notice the presence in Transnistria of the 10th Russian army which can be viewed as an instability factor in the area which makes a political and maybe ecological pressure on Moldova and Ukraine. 10.1.9 Nature, forest and biodiversity. The natural steppe ecosystems are dominant in Ukraine. The scattered and small remains of virgin and old fallow steppes on the slopes of river valleys, ravines, high banks and sea limons continue gradually to degrade under the impact of various anthropogenic factors (cattle grazing, construction, recreation, pollution, destruction of vegetation sites, etc.). This tendency has been somewhat reduced since cattle grazing has become less intensive because herds have considerably diminished in the agricultural enterprises. However, large natural pasture zones in the steppe strips are in the third and fourth stages of degradation. If the isolated steppe remains in this condition for a prolonged period of time, the result will be an irreversible loss of biodiversity. More and more botanists express concern that species and regional specificity of the steppe flora might be in decline, and worry about the introduction of species related to human activity into the local flora. Evidently, these phenomena are most clearly pronounced in the southern and eastern parts of Ukraine. In terms of forest areas and timber stands, Ukraine is experiencing a shortage of forests (on 1 January 1996, the forest resource area in Ukraine is 10.8 million hectares, 9.4 million hectares of which were covered with forest vegetation and percentage of forest area is 15.6%). In Moldova forests cover 9.6% of the territory, 86% of these are planted and the rest are steppe formations generally transformed in arable land. Natural formations represent only 4% of the total cover. The largest forests are located in central and western regions (Codri). Forest cover is low everywhere else. Moldovan forests have the highest proportion of broadleaved species of any

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temperate zone country (over 99% of the growing stock of 35.3 million m3). Oak (Quercus robur, Q. petraea and Q. rubescens) is the predominant species (52% of area). The second most common species (26%), namely robinia (Robinia pseudoacacia), has been introduced to stabilize poor soils. The rest covers a wide range of other indigenous species, such as ash, beech, lime, maple, hornbeam, birch, and poplar. The 1995 survey undertaken under the Convention of Long-range Transboundary Air Pollution showed that 25.6% of trees were healthy, 40.4% were damaged (classes 2-4), and 1.0% were dead. 43.0 % of oaks and 27.6% of sessile oaks were affected. In comparison with 1994, the percentage of trees showing over 25% defoliation increased. This situation can be explained by excessive drought during the past 15 years and the effects of air pollution. Moldovan forests are also vulnerable to insects and fungi. (Source: DEP, National Strategic Action Programme (1995) and the Red Book for Moldova). The human pressure upon natural resources is high and requires large funds to protect, to make a sustainable development and to make eastern countries’ economies more efficient. Synanthropization in the Republic of Moldova and the extensive anthropogenic activity challenged the invasion of anthropophyle (synanthropogenic) species in degraded agrarian and natural ecosystems and brakes the processes of natural development and restoration of natural biocenosis. On the other hand, over 12,000 species of plants and trees were introduced on the territory of the Republic of Moldova. Flora of the republic's forests is characterized by a high proportion of introduced species (38.7%) from other floristic regions. Concerning wildlife we can appreciate that, especially for birds in transit, the migration channels represented by the big rivers like Prut (Romania-Moldova border), Danube with Danube Delta, Dniestr, Dniepr, Volga, etc. may be natural highways to spread recent biological threat of the bird flu inside the continent. 10.1.10 Water. The Republic of Moldova as well as most of Ukraine is located in a region of insufficient precipitation with a torrential regime and has limited water resources. For Moldova medium and moderate droughts (respectively 70% and 90% of normal rainfall) have been reported 40% of the time over the past 50 years; severe droughts (less than 45% normal rainfalls) 4% of the time only (for Moldova).

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The available overall aquatic resources in Moldova represent 6.3 billion m3 in a typical year, 4.9 billion m3 in a dry year and 3.4 billion m3 in an extremely droughty year. About 3.2 billion m3 of water are needed annually for all national economic sectors and for the supply of drinking water - of which about 2 billion m3 are used at the Moldovan Thermal Power Plant. The rest (1.2 billion m3) is used as follows: 63% for agriculture, 15% for household water supply, 14% for industry and 8% for building, transport and other uses. The Republic draws 56% of its water from the Dniestr River, 16% from the Prut River, 8% from small rivers and 20% from underground resources (these data do not include phreatic water sources from rural regions). Likewise, for Ukraine the retrieval from water bodies comprised 19,027 million m3 of water in 1998, which is 6% less than in 1997. The withdrawal of underground water was 9% less and reached 3,363 million m3. The intake of sea water was over 790 million m3. On the whole, the share of irreversible water use in Ukraine was 6,946 million m3 or 36% of the total intake. From this quantity of water, 4,635 million m3 are lost in the process of its use.

Figure 10-1 : Dynamics of water abstraction from surface and ground water systems (1992-1998) (1,000,000 m3)

In 1998, 13,044 million m3 of water were used, which is 1,685 million m3 (11.4%) less than in 1997. The main reason of this decrease in water retrieval and use volumes is the decline of productive activities in Ukraine. Introduction of payment for special use of fresh water resources was one of the factors influencing the volumes of water abstracted and used (GRID-UNEP – 1999).

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10.1.11 Land resources. For the best part of European former Soviet countries, land is an important asset. Due to improper exploitation during communism different types of land degradations are extensive. As is shown by data released by the State Committee for Statistics of Ukraine, the land resources of Ukraine amounted to 60.4 million hectares at the beginning of 1999. Agricultural land covers 72% of the country’s surface, out of which 69% is arable land, including 54.4% of tillage, 0.4% of virgin land, 1.6% of perennial plantations, 3.8% of hayfields and 9.1% of pasturelands. A large area – that is 159,000 hectares - is occupied by radioactively contaminated arable lands, which are not used for agricultural production, plus 161,400 hectares of deteriorated land. In Moldova, torrential rain affects about 85% of agricultural land, i.e. that located on slopes, covering roughly 2 million ha. According to data from 1993, 886,000 ha, or about 25.8% of the total land area including agricultural land, have been affected by different forms of primarily water erosion. More than 310,000 ha are considered to be eroded to a medium to high degree. The rapid soil erosion has serious implications for the long-term sustainability of agricultural production in Moldova, as the natural regenerative capacity of soils on slopes is low. Moldova's soil has also some unusual chemical features, with a high level of fluoride in the north-west, an iodine deficit in the north, and a manganese deficit in other regions. Reportedly, these characteristics, combined with the heavy application of mineral fertilizers including traces of heavy metals, have led to special reactions and conditions. As a result, the humus content of the soils in question has dropped sharply, leading to a negative balance of nitrogen and phosphorus. Additionally, a recent study from the Centre for Hygiene and Epidemiology shows that 1.4% out of 660 soil samples did not meet the standards because of high nitrate (5 samples) or metal content. 10.1.12 Black Sea and Sea of Azov. The Sea of Azov and the Black Sea are the most distant Seas from the ocean in the world, and the surface of their catchment basin largely exceeds their own areas. This has conditioned their extreme sensitivity to the effects of human activity. What is more, during the last decades, there took place an explosive development of the eutrophication processes, pollution of the sea shelf by toxic agents, sea shore abrasion, loss of biological diversity and fish resources, together with a considerable waste of recreational resources.

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The Azov – Black Sea Basin includes 98% of Ukrainian and Moldovan drainage network. The catchment basin of the Sea of Azov and Black Sea covers 2.4 million km3. The coast of the Black Sea and the Sea of Azov constitutes a considerable part of the southern borders of Ukraine. The total length of the coastline is more than 3,000 km. The total length of the Ukrainian coastline within the limits of the Sea of Azov and Black Sea is nearly 3,000 km, while Romania has only 245 km. Intensive economic development has led to considerable ecological pressure on the ecological systems of the Black Sea and Sea of Azov. A pollution level of the above seas exceeding the assimilating capacities of the seas’ ecological systems, introduction of alien biological species, utilization of the natural sea resources in a volume exceeding their potential, implementation of ecologically hazardous technologies of sea resource development, transportation and reloading of sea cargoes, etc., have brought about great changes in the natural conditions during the last thirty years. Microbiological pollution of the coastal waters by the waste of municipal enterprises often makes this water unfit for recreational use. Wave abrasion aggravates the dangerous geological processes along the entire seashore. One example of negative effects upon the sea environment is the dredging and hydro-mechanical works, which are conducted in the territorial waters and on the Black Sea shelf. For Romania and international ecological organizations, the recent proposed construction of the Bystroe channel in the Danube Delta is of great concern. That may have important ecological implications. The proposed project could damage the unique Danube Biosphere Reserve, which received UNESCO status in 1991 and is part of RAMSAR convention. Experts estimate that, if this project is completed, the Danube Biosphere Reserve will be partially cut off. Over 1,500 hectares of land may be lost together with some forested areas. In Ukraine another important problem of the sea coast zone is seashore erosion. According to estimates, about 2,600 km of the coastline has experienced the effects of erosion and washing-away of soil. Around 100 hectares of land are washed away annually, which prevents its useful utilization. That causes a shrinkage of territory available for town planning and tourism development and, in some cases, negatively affects the coastline’s ecological system. The measures to protect the seashore are fragmented and do not create a joint protection system all along the entire Ukrainian coastline. Following the adoption of several decrees of the government, about 150 km of the shore have been reinforced. Same problems can be identified on Romanian shore. Also most remarkable are the beach erosion, cliffs degradation by abrasion and even Constanţa city area instability.

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The most sensitive area to the anthropogenic pressure is the coastal zone of the Black Sea and Sea of Azov, especially the port areas and river estuaries along with the large metropolitan areas located close to the sea. A considerable contribution to the pollution of the coastal zone of the Black Sea is made by the industrial enterprises situated on the coast, which discharge the sewage into the seas. The state of the Black Sea biological resources does not show any tendency towards an improvement. The poor economic situation in the country not only makes any improvement impossible, but also the maintenance on a necessary level of scientific research activities, which could monitor and forecast the development of the state of the biological resources, and make possible the development of new approaches in artificial sea-farming of various species of fish in the sea industry. 10.1.13 References Berge E., Bartnicki J., Olendrzynski K., Tsyro S.G., 1999, “Long-term trends in emissions and transboundary transport of acidifying air pollution in Europe”, in Journal of Environmental Management, Volume 57, Number 1, pp. 31-50 (20). http://enrin.grida.no/htmls/moldova/soe/ http://enrin.grida.no/htmls/moldova/soe/waste/recycle.htm http://nature.org.ua/nr98/englv/region/5_2.htm www.un.org/esa/earthsummit/moldo-cp.htm www.efi.fi/fine/resources/moldova.html http://www.belgium.iom.int/STOPConference/Conference%20Papers/20%20Bruggeman%20Brussels%20IOM.19.09.02.pdf http://www.interpol.int/Public/TechnologyCrime/CrimePrev/default.asp

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11 EUROPEAN NEIGHBOURHOOD THEMATIC ANALYSIS

Pierre Beckouche

Yann Richard LADYSS

11.1 The Neighbourhoods question in the EIW programme. Triad, Globalisation, Regionalisation

How is the Neighbourhoods question related to the Europe-In-The-World concern? In order to make it clear (even if a little too simple maybe), we can assume that, from a geographical point of view, the world economy is going three territorial paths. The first one is the well-known Triad, which is ongoing for numerous decades. It is based on the long run dominance of Europe and then Northern America, caught up by Japan and more recently by the Asian Tigers. This view focuses on the leading transnational corporates and especially TNC of the northern leading countries, linked by a mix of both competition and cooperation. This view emphasizes the gap between the North and the South – except a few Tigers. The second one is the Globalisation view, driven by the revolution of transports and communication and the general surrender of tariffs. In this highly accessible world, the key-word is networks, the main territories are gateway cities. This view emphasizes the actual or potential connection of emerging countries in the South. The third one is Regionalisation, due to the advantages of proximity (especially since the rise of oil price and – maybe – the end of decreasing travel costs trend). This view focuses on the need for re-regulate a world economy that has been developing during the two last decades through a huge deregulation pattern. The regional scale (i.e. Europe, Northern America, Latin America, South Asia, Eastern Asia etc) could be a relevant scale for new public policies, due to complementarities of concerned national economies, common environmental stakes, shared cultural values, historical links, migratory links, and any other assets for win-win co-development. In several of these Regional cases, a leading economy pulls the developing countries of its neighbourhoods. The “North-South regionalism” notion means complementarity between rich countries with a great deal of capital, technology and know how on the one hand, and on the other hand developing countries with large – and more and more educated – labour forces (which are dramatically lacking in Japan or Europe for instance) and rapidly growing markets.

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Of course these three paths are relevant, and certainly intermingled. The goal of this chapter is to show that the third one – Regionalisation and Neighbourhoods – is certainly the less known but the surging one.

Table 11-1 : The three territorial paths of the world economy

Triad Globalisation Regionalisation

time long run chronology (2 centuries)

modern background (1/2 century) rising issue (1 decade)

driving idea power openness, accessibility Need for re-regulation of the

world economy. New (possible) scale of public policies

driving forces leadership succession in time: Europe; USA ; Eastern Asia

-revolution of mobility, ‘synchronisation’ of world

economy diffusion of development

valorisation of proximity for both economic development and

policy making

principles of organisation

space shaped by large firms (mix of competition and cooperation) networks polycentrism

relevant territories

North integration vs. South marginalisation gateway cities Neighbourhoods, North-South

regionalism

The table 11-2 highlights the way one can assess Regionalisation. One can use economic, cultural, environmental and political index. These index show: -the convergence or divergence of structures (for instance does the level of economic development of the Northern and the Southern shore of the Mediterranean, converge / or diverge?) - the links between the countries that make up a Region. Here the question is: do exchanges within the Region grow quicker or slower than exchanges between this Region and the rest of the world? In the case of the European region (Espon space + surrounding countries, including Russia and Caucasian states, Mediterranean states and Middle East), we address here two questions: does EU economically and socially integrate its neighbourhoods more and more, or on the contrary are we experiencing a growing divide? Is the answer the same of the eastern and on the southern sides of Europe?

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Table 11-2 : The index of regionalisation

STRUCTURES FLOWS

economy

. Quicker increase of economic regional exchanges (intra-zone) than at global scale (inter-zones)

. Level of development: continuity rather than discontinuity . Evolution of development : convergence rather than divergence

. Important intra-industrial exchanges, rather than international division of labour (inter-industrial exchanges)

. Complementarity rather than competition . “North-South regionalism”: South = increasing labour forces & markets, lack of capital and technology; North = shortage in labour forces and markets, lot of capital and technology

culture

. Presence of regional foreign people of the Region among local population

. Workers; students ; tourism ; retirements : Regional migrations bigger than global migrations

. Diffusion of press and TV programs environment . Common threats . Interaction of pollutions

policies . Common values Coordinated management of Regional public goods :

. General agreements (e.g. Free Trade Areas) . justice and security

. Common architecture of education & diplomas mutual recognition (e.g. “LMD”-Bologna process)

. transports and planning . education exchanges

. Common institutions and common representation . gestion of environmental crisis, etc.

11.2 The Regional economy. West-East integration, North-South divide

11.2.1 Structures – GDP On the long run (half a century), disparities have not increased between the European economy and the southern Mediterranean one. But the economic development of this southern shore has gone badly in the very last decade. The recent evolution of GDP – were it currant dollars or PPP – shows that the region is experiencing a North-South divergence rather than a convergence. The 10 new member states (NMS) are (slightly) filling the gap with Western Europe, whereas the MEDA countries are clearly experiencing an increasing gap. The other Mediterranean countries, that is Turkey and Israel, are in between. After a terrible decline since the end of the 19980ies, NIS countries such as Ukraine have been recovering a little for a couple of years. In a word, during these recent years, the worst figures concern the MEDA countries.

191

Table 11-3 : GDP per inhab. (PPP, constant 2000 US$)

0

5 000

10 000

15 000

20 000

25 000

30 000

1987

1989

1991

1993

1995

1997

1999

2001

2003

W. Europ

Israël

10 NMS

Turkey

Ukrainia

MEDA

Note. « Western Europe » : UE15 plus Switzerland and Norway. « 10 NMS » : new EU member states (2004). « MEDA » (excl. West Bank and Gaza) : Morocco, Algeria, Tunisia, Egypt, Jordan, Lebanon, Syria. Source : World Bank Nevertheless, Southern neighbourhoods should not be considered as a derelict area for Europe. Consolidated as one general sub-region, the Mediterranean neighbours (i.e. Meda countries + Turkey and Israel) represent a bigger economy than NMS’s, and almost as big as western NIS including Russia and Ukraine (figure 11-1). This means that, in the framework of the actual and potential North-South regionalism, the Mediterranean neighbourhoods has to be considered as a very relevant potential economic partners for the EU.

192

Figure 11-1 : GDP (constant 2000 b US$)

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

1987

1989

1991

1993

1995

1997

1999

2001

2003

Western Europe

NMS 10

Russia + Ukraine

Medit. neighbours(incl. Turkey andIsrael, excl. WB&G)

Source : World Bank

11.2.2 Flows - Trade

11.2.2.1 Links grow eastward and decline southward

During the last fifteen years the conditions of economic integration in the region have considerably increased: end of Comecon, recovery after the end of the Yugoslavian war, Barcelona Process and Association Agreements, generalisation of economic strategy based on international exchanges rather than on autarchy (even in Syria). Still, is the UE commercially rather linked to its close neighbours, or is it more and more related to remote industrial and emerging countries? Do we really experience the consolidation of a Euromediterranean Region from Morocco to Russia polarised by Western Europe? Or rather a commercial geography lead by remote networks connecting the poles of the Triad?

193

The answer is both. Table 11-4 deals with EU15’s trade of goods since 1980. It shows that almost a half of the EU15’s trade is made with “neighbours” – “neighbours” in a wide sense, CEEC included. CEEC are more and more linked to the Western Europe: they represented 3% of UE’s trade in the 1980s, they represent today more than 11%. Should we add Switzerland and Norway and Russia (since commercial partnership between EU and Russia has risen during the last decade), what could be called the European continental integration is clearly on the way. Despite intense deregulation and international opening – not less than in the central or eastern part of Europe – the southern neighbours do not show such integration. Taken altogether (Meda countries, Middle East and Arab peninsula, Turkey and Israel), they represent 12% of EU15’s trade today, which is not little; but their relative weight was twice as big 25 years ago. These figures show that, as a whole, the Region trading integration has been reducing during the 1980ies, and has been recovering somewhat during the last decade thanks to the commercial integration of the CEEC only.

194

Table 11-4 : Consolidated EU15’s trade of goods (%)

----------exportation----------

---------importation---------

-------export+import-------

1980 1995 2003 1980 1995 2003 1980 1995 2003

CEEC (a) 3,4 7,4 11,8 2,5 6,4 10,9 2,9 6,9 11,3 European Balkans (b)

3,7 2,9 3,9 1,8 2,2 2,7 2,6 2,6 3,3

-of which Bulgaria 0,4 0,4 0,5 0,2 0,3 0,4 0,3 0,3 0,4 -of which Romania 0,9 0,7 1,3 0,7 0,6 1,1 0,8 0,6 1,2 -of which Croatia 0,0 0,7 0,7 0,0 0,3 0,3 0,0 0,5 0,5 Other Europe (c) 16,6 13,2 10,9 10,3 13,2 11,2 13,0 13,2 11,1 Σ .Europe stricto sensu (=a+b+c)

23,7 23,4 26,7 14,6 21,9 24,8 18,5 22,7 25,7

Russia (d) 4,8 2,8 3,4 5,3 3,9 5,3 5,1 3,4 4,4 Ukraine 0,4 0,6 0,3 0,4 0,3 0,5 Turkey 1,0 2,3 2,9 0,4 1,7 2,4 0,6 2,0 2,7 Near & Middle East(e)

12,8 6,9 6,9 20,8 4,3 4,1 17,4 5,6 5,5

-of which Israël 0,9 1,7 1,2 0,6 0,9 0,8 0,7 1,3 1,0 -of which Lebanon, Syria & Jordan (f)

1,5 0,9 0,7 0,4 0,4 0,3 0,9 0,6 0,5

North Africa (g) 8,1 4,5 3,4 6,3 3,9 4,2 7,1 4,2 3,8 Total Meda (=f+g) 9,7 5,4 4,1 6,6 4,3 4,5 7,9 4,8 4,3 Σ Eastern and South. Neighbours (h)

approx. 27,0

16,9

17,2

approx. 33,0

14,1

16,4

approx. 30,5

15,5

16,9

North. America 15,9 19,9 24,8 20,5 21,2 16,8 18,5 20,5 20,8 Latin Am. & Antilles

8,0 7,0 5,2 7,3 6,1 5,4 7,6 6,6 5,3

Eastern Asia 8,3 21,4 16,7 11,9 25,2 27,8 10,3 23,3 22,3 -of which Japan 2,5 5,7 4,1 5,5 10,0 6,7 4,2 7,8 5,4 -of which China (i) 2,0 5,3 6,0 2,2 6,1 10,6 2,1 5,7 8,3 Other Asia 2,1 2,5 2,2 1,2 3,9 2,7 1,6 3,2 2,5 Oceania 0,2 2,4 2,2 1,6 1,4 1,3 1,0 1,9 1,8 Africa (except North Africa)

10,5 4,5 3,7 9,3 4,7 4,1 9,8 4,6 3,9

Grand Total 100 100 100 100 100 100 100 100 100 (a) Poland, Slovakia, Czech Rep., Hungary, Baltic States. (b) Former Yugoslavia (excl. Slovenia), Albania, Bulgaria, Romania. (c) Switzerland, Norway, Cyprus, Malta… (d) USSR before 1995. (e) Near East (excluding Turkey), Arabic peninsula, Iraq, Iran. (g) From Morocco to Egypt. (h) Russia, Ukraine, Turkey, Near and Middle East (including Iraq and Arab Peninsula), North Africa. (i) including Hong Kong. (NB: no data on Belarus and Caucasian countries in this table) Source: Eurostat Statistical Yearbook, UE Trade 1958-2003.

195

Southward, the sole exception is Turkey; in particular Turkish exports to UE are rapidly growing. For decades, Turkey has developed a true productive system of small and medium sized firms, run by an active middle class. The severe economical and financial crisis of 2000-01 has lowered the internal market. But Turkish economy could counterbalance this difficulty by enhancing exportation world wide, including Europe - the half of its exportation. Another positive step is that those exportations are less and less primary agricultural or rough clothing exportations. A decade ago, textiles, clothes and food products were the bulk of Turkish exports to EU; today textile-clothes is still in first rank but the share of transport equipment and automotive production items is rapidly growing. These quite advanced industrial products are dominating EU’s exports to Turkey too; this means that EU and Turkey have entered an intra-industrial trade that resembles developed countries trade or “north-South regionalism” (like US/Mexico trade for instance), rather than classical trade between developed and developing countries. Since 2000 (table 11-3), and except Israel of course, no other Mediterranean country – not even Tunisia – shows such trading features. The Turkish commercial dynamism is the only one that copes with commercial integration between EU and its continental neighbours eastward: European Balkans and namely Bulgaria and Romania – where a rising trade with EU seem to anticipate the UE membership; Russia and NIS both western and Caucasian. As a whole, Eastern neighbours have suddenly become bigger commercial partners for UE than Southern – even including Turkey.

196

Figure 11-2 : Goods trade (a) between consolidated EU25 and its neighbours, 2000-04

2004 2004 2004/2000

(values, M €) (% total)

evol (%), values

Island 3 612 0,2 5 Norway 86 642 4,4 18 Switzerland 136 369 6,9 1 Σ Western Europe (out of EU) 226 623 11,4 7

Bulgaria 10 709 0,5 56 Romania 32 051 1,6 76 Σ Bulgaria + Romania 42 760 2,1 71

Turkey 68 931 3,5 41

Macedonia FYR 1 721 0,1 -28 Serbia & Mont. 6 635 0,3 103 Croatia 13 688 0,7 56 Bosnia-Herz. 3 325 0,2 35 Albania 1 610 0,1 44 Σ Western Balkans 26 979 1,4 50

Russie 126 203 6,3 51

Belarus 5 287 0,3 77 Ukrainia 17 675 0,9 82 Moldavia 1 184 0,1 79 Σ Western NIS 24 146 1,2 81

Armenia 564 0,0 43 Azerbaidjan 2 404 0,1 78 Georgia 794 0,0 59 Σ Caucasian countries 3 762 0,2 68

Syria 4 884 0,2 -10 Jordan 2 209 0,1 20 Lebanon 3 435 0,2 8 Palestine 38 0,0 -53 Egypt 11 557 0,6 -1 Libya 17 073 0,9 9 Tunisia 14 298 0,7 11 Algeria 24 580 1,2 8 Morocco 15 394 0,8 10 Σ MEDA countries 93 468 4,7 7

Israel 21 334 1,1 -20

Iran 20 044 1,0 44 Iraq 3 925 0,2 -47 Seoud. Arabia 28 659 1,4 2 Kuweït 5 487 0,3 -7 Σ Middle East 58 115 2,9 5

TOTAL Europ & East. Neighbourhoods 450 473 22,6 27 TOTAL MEDA, Israel & Middle East 172 917 8,7 2 Turkey 68 931 3,5 41

World 1 990 541 100,0 7 (a) Imports + exports. Source : Eurostat

197

Is this continental integration symmetric? Western Europe trades more and more with European Balkans and CEEC, do the latter trade more and more with Western Europe? The answer is yes. See figure 11-4: trade with EU increases faster than with the rest of the world in the case of Romania, and nowadays for Bulgaria. Eurostat says the same concerning the western Balkan countries (former Yugoslavia and namely Croatia): 1999-2003 trade growth rate has been higher with the EU than with the rest of the world; those countries now make 84% of their trade with the EU (Eurostat 2005). The evolution is more balanced in the case of Turkey, which opens world wide – but all the same much more towards EU than towards USA or even towards the Meda countries: local sub-regionalisation is weak compared to the polarisation of the whole region by Western Europe. Balkans countries and CEEC have experienced a very rapid westernisation of their trade since the end of the soviet era. They trade more and more with EU (even though with a strong trade deficit, see fig. 5 which proves that the regional trade integration is a positive process for European economy!), and clearly less and less with Russia. Meda countries have been very much polarised by Western Europe for a long time. They still are, even if less and less in the Near East. Especially Maghreb, these countries continue to be enormously dependant upon European markets, with strong trade deficit and dissymmetry: MEDA countries provide EU with 7% of its imports – but this represent more than the half of MEDA countries exportations. EU provides these countries with 58% of their importations – but this represent only 7% of our exportations. The Mediterranean most dependent country upon European markets is Tunisia, which makes the three quarters of its exportations there. Tunisia’s exportations depend more upon European markets… than France or Germany do! In a way, one could say that Tunisia is a “European Puerto Rico” but without the political link. As far as the eastern neighbourhood of EU concerned, almost all the states that belong to CIS are progressively shifting their foreign trade from an intra regional CIS pattern to a western oriented pattern. It is obvious for the three Caucasian countries: EU has become by far their first trade partner. Although Russia is still a major trade partner for each one of them, its share in their external trade has regularly decreased since the 1990s. Obviously, the progressive enlargement of the European economic region eastward involves not only Russia but CIS as a whole. This process is largely due to the recent enlargement of EU to the 10 new member states which have kept economic relations with Russia and former USSR despite their own strong commercial reorientation from East to West. Only the

198

countries of Central Asia are still keeping Russia as their first commercial partner before EU 25 – but not all of them and certainly less and less.

Figure 11-3 : Share of EU25 and of Russia in the goods trade of the CIS (2003)

0% 10% 20% 30% 40% 50% 60% 70%

Uzbekistan

Ukraine

Turkmenistan

Tadjikistan

Moldavia

Kirghizstan

Kazakhstan

Georgia

Belarus

Azerbaijan

Armenia

EU 25Russia

Source : Eurostat

199

Figure 11-4 : Goods trade (imports + exports), b €

Turkey

0

10

20

30

40

50

60

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

with EU15

rest of the world

with USAwith Medit. Basin

Bulgaria

012345678

1994

1995

1996

1997

1998

1999

2000

2001

2002

with EU15

rest of the world

with Russia

Romania

0

5

10

15

20

25

1994

1995

1996

1997

1998

1999

2000

2001

2002

with EU15

rest of the world

with Russia

Source : Eurostat

200

Figure 11-5 : EU Exports and imports (billion €) with :

Turkey

05

10152025303540

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

EU Exports

EU Imports

Croatia

01234567

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

EU Exports

EU Imports

Bulgaria

0

1

2

3

4

5

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

EU Exports

EU Imports

Romania

02468

101214

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

EU Exports

EU Imports

Source : Eurostat

201

Figure 11-6 : Goods trade partners of central Europe countries and Turkey, 1993-2001

------central Europe (b) countries------

------------------Turkey---------------

Importations Exportations Importations Exportations

Trading partners: 1993-1994

1999-2000-01

1993-1994

1999-2000-01

1993-1994

1999-2000-01

1993-1994

1999-2000-01

Western Europe (a) 59,6 62,4 59,9 71,5 49,5 51,2 50,1 53,7 Central Europe (b) 8,3 9,2 10,5 11,3 1,3 1,0 2,2 1,6 Baltic States 0,4 0,3 0,5 1,1 0,1 0,2 0,1 0,2 European Balkans (c) 1,1 1,2 2,2 3,2 2,1 2,2 2,5 3,3 Russia 9,8 7,8 5,4 1,8 4,9 7,1 4,0 2,5 West. & North. NIS (d) 1,4 1,1 1,7 1,7 2,2 2,3 1,3 2,3 Maghreb (e) 0,2 0,2 0,6 0,2 1,5 4,0 3,0 2,9 Near East (f) & Turkey 0,5 0,7 1,8 1,0 1,3 2,3 5,7 6,4 Middle East (g) 0,5 0,0 0,5 0,2 8,1 3,6 7,0 2,7 Σ region 81,8 83,1 83,2 92,2 70,9 74,0 75,8 75,6 North. America 3,8 4,2 3,1 3,7 11,6 8,0 8,0 10,9 Latin America 1,2 1,0 0,9 0,6 1,6 1,1 0,6 1,0 Africa (others) 0,8 0,4 0,9 0,3 1,1 1,1 0,7 1,1 Asia (others) 6,2 10,5 4,1 2,5 13,0 12,5 13,2 6,3 Oceania 0,1 0,1 0,2 0,1 1,1 0,5 0,2 0,4 World 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0

How to read this table : at the beginning of the 1990ies (average of 1993 and 1994), 49,5% of Turkey’s imports came from western Europe; at the beginning of this century (average 1999-2000-2001), the number was 51,2%. (a) UE15 plus Switzerland and Norway (b) Czech Republic, Slovakia, Hungary, Poland (c) Albania, former Yugoslavia, Romania, Bulgaria (d) Belarus, Ukraine, Moldavia, Caucasian countries (e) Morocco, Algeria, Tunisia, Libya, Malta (f) Cyprus, Lebanon, Syria, Jordan, Israel, Palestine, Egypt (g) Iran, Iraq, Saudi Arabia, Kuwait. Source : OECD

202

Map 11-1 : Geography of Turkish goods trade: a strong euromediterranean feature

203

11.2.2.2 Mapping the bilateral intensity of trade

The value of the external trade of goods is not sufficient to draw a comprehensive picture of economic regionalization, because it is biased by parameters such as the economic (the GDP) or the demographic size of commercial partners. The bigger the partners, the more their trade exchanges are likely to be massive. It is empirically easy to understand that Russia makes more trade, in absolute terms, with Germany than with Estonia or Slovakia. The coefficient of relative bilateral intensity of trade is a relevant way to measure the real trade proximity between two commercial partners. It compares the observed bilateral flows between them with the theoretical flows that reflect their overall capacity of trade (Freudenberg 2005). It is not per se better than the value of exchanges; it must be combined with it to have a more detailed view of what goes on between EU and its neighbours. The maps give a representation of trade between 11 countries located in the neighbourhood of EU. Each map combines two variables: the volume of observed trade flows in absolute terms in 2004, and the coefficient of relative bilateral intensity of trade. These maps show a clear sub-regional phenomenon: the neighbouring countries are often commercially linked to the close parts of the Espon territory. They highlight a Russian-East European area, a Western Mediterranean regional area - but in the Eastern Mediterranean, trade intensity does not really link neighbours to the Espon territory. Despite the decrease of transport costs which has made possible a strong process of globalization, the distance between countries still plays a major role in the geography of trade flows. Other factors such as economic structures (and consequently economic specializations) and differences in levels of economic development also play their part in this geography of trade intensity. At last, the legacy of former colonial ties is still visible between France and Maghreb, Russia and former Soviet Republics, etc. The CIS countries have a high intensity of exchanges with other CIS countries and secondarily with CEE Countries. Despite the outbreak of the Soviet Union and of the Socialist bloc and despite a strong process of commercial polarization by Western Europe, CIS can still be considered as a commercial region based on a relatively high trade bilateral intensity between its members. Besides, Russia, Ukraine and Belarus have a higher trade bilateral intensity with CEE Countries than with Western Europe.

204

Map 11-2 : Exchanges of goods and bilateral intensity of trade of Belarus with the Euromed region in 2004.

Map 11-3 : Exchanges of goods and bilateral intensity of trade of Russia with the Euromed region in 2004

205

Map 11-4 : Exchanges of goods and bilateral intensity of trade of Ukraine with the Euromed region in 2004.

The Maghreb countries have a high intensity of exchange with the Mediterranean members of EU (France, Spain, Italy).

Map 11-5 : Exchanges of goods and bilateral intensity of trade of Algeria with the Euromed region in 2004.

206

Map 11-6 : Exchanges of goods and bilateral intensity of trade of Morocco with the Euromed region in 2004.

Map 11-7 : Exchanges of goods and bilateral intensity of trade of Tunisia with the Euromed region in 2004.

The South East Mediterranean countries have a relatively low intensity of exchanges with EU and a high intensity with the countries which belong to the

207

Near and the Middle East. Even Turkey has a higher intensity of exchanges with East Mediterranean and Central Asian countries than with Western Europe. Map 11-8 : Exchanges of goods and bilateral intensity of trade of Egypt with the Euromed region in 2004.

Map 11-9 : Exchanges of goods and bilateral intensity of trade of Jordan with the Euromed region in 2004.

208

Map 11-10 : Exchanges of goods and bilateral intensity of trade of Lebanon with the Euromed region in 2004.

Map 11-11 : Exchanges of goods and bilateral intensity of trade of Turkey with the Euromed region in 2004.

209

Contrarily to what happens inside the CIS region, the Mediterranean neighbours often show a surprisingly low intensity of exchanges between them, especially between those of the western and those of the eastern Mediterranean basin. To this respect, the case of Turkey is rather exceptional because it shows a relatively high coefficient with a majority of South and East Mediterranean countries. Thanks to these maps, one can also distinguish three types of countries inside the ESPON space. European Mediterranean countries have a relatively high intensity of exchanges with Mediterranean neighbours. Maps of trade bilateral intensity of France, Italy and Spain would certainly show higher coefficients with Maghreb countries than with other EU members. CEE Countries and Finland show a high intensity of exchanges with one or several CIS countries. Northern and Scandinavian countries have a relatively low intensity of exchanges with both East and South neighbour countries.

11.2.2.3 Flows - FDI

FDI draw the same geography of integration eastward and divide southward. During the last decade (1993-2003), Maghreb, Egypt, Syria, Lebanon and Jordan altogether did not receive more foreign direct investments than the sole Israel ; CEEC received for times as much as them16. Syria, Algeria and Egypt got particularly few FDI. It is a fact that the Mediterranean attracts more foreign capital since the mid 1990s and the first Association Agreements, but much less than Eastern Europe. Furthermore, investors now reach new eastern countries in the region: Croatia, Macedonia FYR and Bulgaria, because the cost of labour is cheaper than in NMS and because they will be one day member of the EU; also Georgia and Azerbaijan (because of oil of course in the latter); even Ukraine attracts proportionally more FDI than the Mediterranean neighbours – but it is true that the country remains unstable and that a important part of the FDI comes from Russia or from Ukrainian oligarchs who use international network as a laundering tool. Last, investors say that former Yugoslavia (Serbia and Bosnia) will be a relevant target when stabilised. EU has already spent a great deal of money for this stabilisation, with no doubt this part of Europe will quite soon be in the influence of western European investors.

16 In some cases this foreign investment might be considered as too high. In Hungary for

instance, 45% of industrial jobs, the three quarters of exports and of R&D expenditures are made by local subsidies of foreign companies. On the other hand, it is well known that Ireland, which has been hosting a great deal of FDI, has also managed to develop its economy (infrastructures, training…).

210

The annual average FDI during the years 2002-2003-2004 in Meda countries was 9 billions dollars, whereas it was 18 in the CEEC, and 18 in the sole Mexico (mainly from United States and Canada)! Many criteria (role of EU markets for the Mediterranean economies, migrations of workers, students or tourists, cultural links through TV programs, common environmental threats) show the strong integration of the two shores of the Mediterranean, but indeed the key figure about FDI attraction hampers this view. There is not yet a trans-Mediterranean productive system. It has to be added though, that the very recent years show a growing attraction of Meda countries for foreign investors. The ANIMA report (Saint Laurent 2006) says that the FDI there would have jumped to 40 billions dollars in 2005. But (i) the bulk of these investors come form the Gulf oil countries, and (ii) the sectors in which they invest still belong to the classical rent economy sectors such as real estates, tourism, or privatised public services. Of course the ongoing surge of Algerian financial resources thanks to the booming oil price, could contribute to this new Meda FDI feature; but until today, one can say that the Meda countries are highly dependent upon western European markets and investors, but are not significant partners for European exports and investments. The figure 11-8 draws the geography of several Espon countries’ investment abroad. What is striking in the case of Spain, is that this Mediterranean country invests a very low amount of FDI in Meda countries (the pattern would be the same for France or Italy). In the Spanish case, the share of Latin America is high, although the crise of the Argentine economy has considerably reduced the huge Spanish invesment there since 2000. Like in all the other Espon examples showned here, the bulk of FDI are made in other Espon countries, especially in Western Europe. The Spanish invest more in CEEC than in the close Meda countries, despite a very recent rush to Morocco. Germans invest essentially in other European countries and in Northern America (including Mexico: as it is well known now, since the Alena Agreement investors regard Mexico as a “North American country”). The part of CEEC in the German FDI is quite relevant, especially for the central European countries which depend quite a lot on German investments. Meda countries are insignificant. The feature is quite alike for Dutch, Swedish and Finish investment. For all these countries, CEEC are quite significant, although much less than Western Europe or North America. For all these countries, Meda is insignificant. In a word, the CEE Countries benefit from the investments abroad of both close EU15 countries (Germany, Sweden, Finland) and remote EU15 countries (Spain, but also France, Italy...). The Southern neighbours benefit from neither. This make a striking difference with the American region and with the East Asian region: whereas

211

United States and Canada invest very significantly in the developing countries of their region (Central, Caribbean and South America); whereas Japan and nowadays South Korea and Taiwan invest in China and in the ASEAN countries, the European countries do not invest in the developing countries of their regional neighbourhood.

212

Figure 11-7 : Foreign Direct Investment (inflows) % GDP

0,0

1,0

2,0

3,0

4,0

5,0

6,0

1987

1989

1991

1993

1995

1997

1999

2001

2003

W.Europe

MEDA

10 NMS

TurkeyUkrainia

b $ :

0

5

10

15

20

25

1987

1989

1991

1993

1995

1997

1999

2001

2003

MEDA

10 NMS

Turk.Ukr.

Isr.

Note. « W. Europe » : UE15 + Switzerland & Norway (Luxembourg excluded); « 10 NMS » : ten new member states, Malta excluded. « MEDA » (excl. Gaza & West Bank) : Morocco, Algeria, Tunisia, Egypt, Jordan, Lebanon, Syria. Source : World Bank.

213

Figure 11-8 : Geography of FDI of ESPON countries in the neighbourhood Spanish investments in the neighbourhood (flows)

Destination of Spanish FDI outward flows (Σ 1999-2004)

% of Spanish FDI, & % of the receiving countries’

GDP (2003)

Variation of Spanish FDI outward flows (1999-2004*)

% of total Spanish FDI, and € per receiving

countries’ inhab. (2003)

Table 11-5 : Spanish FDI flows abroad, by geographical destination (1999-2004)

-----------------total amounts----------------- -------------weight in the world total-------------

Regions

b €, years 1999-2000-01

(a)

b €, years 2002-03-04

(b) evol (%) (b)/(a)

%, period 1999-00-01

(a)

%, period 2002-03-04

(b) evol (pts),

(b)-(a) Western Europe 72,2 81,4 13 45,6 66,3 20,8 CEE Countries 1,7 3,1 85 1,1 2,6 1,5 New Independent States 0,1 0,3 355 0,0 0,2 0,2 Turkey 0,1 0,1 -40 0,1 0,1 0,0 MED Countries 0,4 2,0 440 0,2 1,6 1,4 Middle East Countries 0,0 0,0 ns 0,0 0,0 0,0 Subsaharian Africa 0,1 0,5 333 0,1 0,4 0,4 North America, Mexico 18,0 13,3 -26 11,4 10,9 -0,5 Latin America 61,3 17,8 -71 38,7 14,5 -24,2 Southern Asia 0,0 0,1 191 0,0 0,1 0,1 Eastern Asia 2,1 1,7 -16 1,3 1,4 0,1 Oceania 0,2 1,3 711 0,1 1,1 1,0 Offshore places 2,2 0,9 -57 1,4 0,8 -0,6 World 158,3 122,7 -23 100,0 100,0 0,0

Source : Unctad. Notes. CEE Countries : Bosnia, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Poland, Roumania, Serbia and Montenegro, Slovakia, Slovenia. Med Countries : Algeria, Cyprus, Egypt, Israel, Lebanon, Libya, Malta, Morocco, Syria, Tunisia. Middle East: Bahrain, Iran, Koweït, Oman, Qatar, Saudi Arabia, United Arab Emirates.

214

Figure 11-9 : Geography of FDI of ESPON countries in the neighbourhood German investments in the neighbourhood (stock)

Destination of German FDI outward stock (2003)

% of German FDI, & % of the receiving countries’

GDP 2003)

Variation of German FDI outward stock (1994-2003*)

% of total German FDI, and € per receiving

countries’ inhab. (2003)

Table 11-6 : German FDI stock abroad, by geographical destination (1994-2003)

---annual average (b €)--- weight in the world total

Regions: 1994-1998

(a) 1999-2003

(b) evol (%) (b) / (a)

% (b)

evol (points) (b) - (a)

Western Europe 133,1 273,4 105 45,2 -9,9 CEE Countries 9,1 30,1 229 5,0 1,2 Med Countries 0,8 1,7 103 0,3 -0,1 Turkey 0,6 1,7 164 0,3 0,0 New Independent States 0,6 2,3 267 0,4 0,1 Middle East Countries 0,2 0,4 120 0,1 0,0 Subsaharian Africa 1,8 3,1 70 0,5 -0,2 North America, Mexico 67,3 233,1 246 38,5 10,7 Latin America 11,1 11,7 5 1,9 -2,7 Southern Asia 2,4 6,6 179 1,1 0,1 Eastern Asia 9,2 26,3 187 4,3 0,6 Oceania 2,7 6,7 152 1,1 0,0 Offshore Places 2,7 6,4 136 1,1 -0,1 World 241,7 604,8 150 100,0 0,0 Source: Unctad. Notes: see table 11-5

215

Figure 11-10 : Geography of FDI of ESPON countries in the neighbourhood. Dutch investments in the neighbourhood (stock)

Destination of Dutch FDI outward stock (2003)

% of total Dutch FDI, and % of the receiving countries’ GDP (2003)

Variation of Dutch FDI outward stock (1994-2003)

% of total Dutch FDI, and € per receiving countries’ (2003) inhab.

Figure 11-11 : Dutch FDI stock abroad, by geographical destination (1994-2003)

--- annual average (b €) --- weight out of world total

Regions: 1994-1998

(a) 1999-2003

(b) evol (%) (b) / (a) % (b)

evol (points) (b) - (a)

Western Europe 84,0 207,3 147 58,3 3,7 CEE Countries 2,8 10,2 262 2,9 1,0 Med Countries 0,6 1,5 138 0,4 0,0 Turkey 0,4 1,1 146 0,3 0,0 New Independent States 0,3 2,1 534 0,6 0,4 Middle East Countries 0,4 1,0 170 0,3 0,0 Subsaharian Africa 1,1 2,8 154 0,8 0,1 North America, Mexico 41,4 89,6 116 25,2 -1,7 Latin America 4,7 8,6 82 2,4 -0,6 Southern Asia 1,8 4,0 114 1,1 -0,1 Eastern Asia 7,0 13,6 94 3,8 -0,7 Oceania 1,6 4,9 212 1,4 0,4 Offshore Places 5,4 3,0 -45 0,8 -2,7 World 154,0 355,8 131 100,0 0,0

Source: Unctad. Notes: see table 11-5

216

Figure 11-12 : Geography of FDI of ESPON countries in the neighbourhood Swedish investments in the neighbourhood (stock) Destination of Swedish FDI outward stock (2003)

Variation of Swedish FDI outward stock (1994-2003)

% of total Swedish FDI, & % of the receiving countries’ GDP (2003)

% of total Swedish FDI, and € per receiving countries’ inhab. (2003)

Table 11-7 : Swedish FDI stock abroad, by geographical destination (1994-2003)

--- annual average (b €) --- weight out of world total

Regions: 1994-1998

(a) 1999-2003

(b) evol (%) (b) / (a)

% (b)

evol (points) (b) - (a)

Western Europe 40,9 87,2 113 69,6 0,2 CEE Countries 0,6 4,2 592 3,4 2,3 Med Countries … 1,0 .. 0,2 .. Turkey … 1,0 .. 0,2 .. New Independent States 0,0 0,8 .. 0,7 0,7 Middle East Countries … … .. .. .. Subsaharian Africa … … .. .. .. North America, Mexico 10,0 24,9 150 19,9 2,9 Latin America 1,6 2,3 38 1,8 -1,0 Southern Asia 0,6 0,5 -21 0,4 -0,7 Eastern Asia 0,8 1,3 69 1,1 -0,3 Oceania 0,5 0,8 40 0,6 -0,3 Offshore Places 0,5 0,7 46 0,6 -0,3 World 58,9 125,3 113 100,0 0,0

Source: Unctad. Notes: see table 11-5

217

Figure 11-13 : Geography of FDI of ESPON countries in the neighbourhood. Finish investments in the neighbourhood (stock)

Destination of Finish FDI outward stock (2002)

% of total Finish FDI, and % of the receiving countries’ GDP (2003)

Variation of Finish FDI outward stock (1994-2002 *)

% of total Finish FDI, and € per receiving countries’ inhab.(2003)

Table 11-8 : Finish FDI stock abroad, by geographical destination (1994-2002)

annual average (b €) weight out of world total

Regions: 1994-1998

(a) 1999-2002

(b) evol (%) (b) / (a) % (b)

evol (points) (b) - (a)

Western Europe 11,77 41,66 254 79,4 4,4 CEE Countries 0,08 1,34 ns 2,6 2,1 Med Countries .. 0,07 .. 0,1 .. Turkey 0,02 0,01 -51 0,0 -0,1 New Independent States 0,04 0,33 ns 0,6 0,3 Middle East Countries .. 0,01 0,0 .. Subsaharian Africa 0,01 0,04 ns 0,1 0,0 North America, Mexico 2,81 6,87 145 13,1 -4,8 Latin America 0,22 0,48 115 0,9 -0,5 Southern Asia 0,08 0,19 ns 0,4 -0,1 Eastern Asia 0,20 1,14 474 2,2 0,9 Oceania 0,07 0,22 207 0,4 0,0 Offshore Places .. .. .. .. .. World 15,70 52,48 234 100,0 0,0

Source: Unctad. Notes : see table 11-5

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The figure 11-15 shows how highly European neighbours depend on western European FDI. The two-thirds of FDI in Tunisia, Estonia or Bulgaria, three-quarters in Poland or Slovenia come from Western Europe. It is less true in Russia and Algeria where the US investors play a bigger role (in oil industry can one imagine, but in both case inflows of FDI remains very low). As a whole, our neighbours depend incomparably more on European investors than on American. Another outcome of these figures is the noticeable emerging role of regional or sub-regional investors who are not western European: Cyprus financial place is a quite important investor in Bulgaria or Russia, Egyptian, Saudi and Kuwait (which numbers would much higher for 2005 data) investors in Tunisia and Algeria. A last striking thing is the very small and declining role of Russia among investors in Estonia as well as in all the other countries of Central and Eastern Europe. The only European countries where Russian plays a significant role among foreign investors are Belarus and Ukraine.

219

Figure 11-14 : Inflows of FDI, breakdown by geographical origin

Algeria

0%10%20%30%40%50%60%70%80%90%

100%19

94

1996

1998

2000

2002

others

Egypt

North America

Western Europe

Tunisia

0%10%20%30%40%50%60%70%80%90%

100%

1994

1996

1998

2000

2002

others

Kuw ait,S.Arabia

North America

Western Europe

Russia

0%10%20%30%40%50%60%70%80%90%

100%

1994

1996

1998

2000

2002

others

Cyprus

North America

Western Europe

Estonia

0%10%20%30%40%50%60%70%80%90%

100%

1994

1996

1998

2000

2002

others

Russia

Latvia+Lith.

Cyprus

North America

Western Europe

Poland

0%10%20%30%40%50%60%70%80%90%

100%

1994

1996

1998

2000

2002

others

North America

Western Europe

Bulgaria

0%10%20%30%40%50%60%70%80%90%

100%

1994

1996

1998

2000

2002

others

S.Korea

Russia

Turkey

Cyprus

Caribbean

North America

Western Europe

Source : Unctad

220

Figure 11-16 shows another process of sub-regional integration: Slovenia has recovered as a financial place for the whole former Yugoslavian space, where it invests the bulk of its FDI abroad.

Figure 11-15 : Stocks of FDI in and out of Slovenia

Stocks in Slovenia

0%

20%

40%

60%

80%

100%

1994 1995 1996 1997 1998 1999 2000

others

former Yugoslavia

North America

Western Europe

Sloven stocks abroad

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1994 1995 1996 1997 1998 1999 2000

others

fomer Yugoslavia

Liberia

North America

Western Europe

Source : Unctad

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11.2.3 Flows – Public aid

11.2.3.1 Where does the European official development assistance go?

EU, that is to say European Union members together with the European Commission, is the first donor of Official Development Assistance to developing countries. The aid delivered by the EU 15 members almost matched the aid distributed by the United States in the 1960 and the beginning of he 1970s. Since then, the gap between these two donors has widened. In 2004, the aid really disbursed by the EU 15 members and the European Commission together represented more than 42 % of the total aid disbursed by all the donors in the world, 43 % in 2003, 42.5 % in 2002, 45 % in 2001 and 44 % in 2000. This – slight – decrease in relative terms, is counterbalanced by the absolute terms, since the total amount of the aid flows disbursed have grown up from 53.300 billion dollars in 2000 to 72 million in 2004.

The major donors official development assistance since 1985

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

1985

1986

1987

1988

1989

1990

1991

1992

1993

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1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Milli

on d

olla

rs (2

003

pric

es)

All donors

UE*US

Japan

Arabs**

Although EU is by far the first donor, its official aid is not harmoniously distributed. The table 11-9 shows the share of each important OECD member in the total aid disbursed in six developing regions. This document can be interpreted in two different ways. It shows where EU (EU 15 members + European Commission) is the more important donor in percentage terms. EU is the first donor in almost all the receiving regions, except in Oceania and Eastern Asia, where Japan is the first one. The status of EU as first donor is mostly obvious in sub-Saharan Africa, in Eastern Europe (CEE, NIS and Balkan countries together) and secondarily in Latin America. It also shows that EU gives the most important amount of aid in absolute terms in sub-Saharan Africa, and secondarily

222

in Central and Southern Asia and in Northern Africa and in Near and Middle East. The aid sent to the neighbourhood (clusters 1 and 2) represented only 23.5 % of the total aid disbursed in 2002 and 2003.

Table 11-9 : The official development assistance disbursed by the main donors in the world (2002-03, Million constant US dollar, 2003 prices)

1 2 3 4 5 6 Japan 252 630 932,4 118,4 3011,4 6615 Etats-Unis 1213,8 3559,82 5048,4 2410,9 2831,6 1100,3 Eur Commission 1153,7 1048,28 2900,92 540,62 613,14 336,24 EU 15 membres 3338,28 3465,37 17986,63 4180,39 4756,71 3560,96 Other OECD countries 657,7 463 222 643,8 1000,3 1544

Source: OECD, DAC base. The maps (11-12 to 11-15) show dramatic difference in the distribution of aid disbursed by the main donors. The two first maps show surprising differences between the geography of aid delivered by the European Commission and the one delivered by the EU members, the latter being largely higher than the former (roughly 7.2 and 23.3 million dollars in 2004). The official aid of the European commission is very much focused on certain regions. It is clearly oriented towards the CEE Countries, Turkey and Palestinian Territories. It shows that the European Commission makes special efforts towards the neighbourhood, and secondarily to sub-Saharan Africa. The aid disbursed by the EU members does not show the same patterns at all. The CEE Countries also receive huge amounts of aid. But the aid is geographically better balanced than in the previous case, although some countries of southern Africa received significantly more during the last period. Contrarily to the aid of the European Commission, the neighbourhood is not particularly pointed by the aid of the EU members. Among other factors, this situation is mainly due to the existence of strong relations between certain European countries and their former colonies (Latin America for Spain, Africa for UK, Belgium and France…). The geographical pattern of the aid disbursed by the United States is quite different. This map highlights the concentration of the US aid on a few regions: Central America and the northern part of Southern America, Near and Middle East, Southern Asia, Eastern and Central Africa. The importance of Middle East is reinforced on the map by the aid disbursed in Iraq consequently to the war against Saddam Hussein. It shows to which extent the United States are involved in the aid towards Mediterranean countries such as Jordan, Palestinian Authority, Lebanon, Egypt and so on. The aid delivered by Japan is more oriented to countries of South, South-Eastern and Eastern Asia. In this case, the regional pattern is much more obvious than in the cases of USA and EU members: Africa and Latin America are clearly left to other donors.

223

Map 11-12 : Geographical breakdown of European Commission’s official development assistance from 2001 to 2004.

Map 11-13 : Geographical breakdown of EU 15 members’ official development assistance from 2001 to 2004.

224

Map 11-14 : Geographical breakdown of United States’ official development assistance from 2001 to 2004.

Map 11-15 : Geographical breakdown of Japan’s official development assistance from 2001 to 2004.

225

11.2.3.2 What is the evolution of the European aid in the neighbourhood?

In the neighbourhood, the breakdown of EU’s official assistance has undergone dramatic evolutions since the 1990s. The graph in the volume 1 (graph n°XX, volume 1, page XX) shows a rapid increase of the aid disbursed in the CEE Countries by the European Commission. This increase is due to the implementation of various development financial programs such as Phare, Ispa, Sapard. All these programs aimed at facilitating the structural reforms of post socialist countries in order to help them on their way to reach the EU member status. These programs still exist nowadays, although those countries are already or will soon be members, but they are gradually stopped and replaced by structural funds. The graph shows that the growing importance given to CEE Countries by the European Commission, whose official aid reaches the same amount of money as in the rest of the world, is unique. The other neighbours of EU have not enjoyed such an aid increase, except for the Western Balkans. This growing gap between the CEE Countries and the South and East Mediterranean neighbours is worrying because, in the same time, the flows of foreign direct investment have remained tragically low. Such a lack of international financial flows is not that harmful for oil and gas producers such as Algeria, but it is harmful to other countries without such resources. The financial base of the MEDA program is not sufficient at all. Besides, the aid flows sent to CIS countries have also stayed very low despite the implementation of the TACIS program. Such aid is not that vital for the Russian Federation, thanks to oil and gas exports, but it is a major subject of concern for other countries such as Ukraine, Moldova, Armenia or Georgia which do not export such primary resources. The aid disbursed by the EU members does not show the same pattern. Although EU members give more money than the Commission to the neighbour countries in absolute terms, the share of the neighbourhood in the total aid disbursed by them in the world is much weaker than in the Commission’s case.

226

11.2.3.3 What is the weight of Europe as an assistance donor in the neighbourhood, in comparison with other donors?

There are two methods to present the geographical distribution of aid flows in the neighbourhood: in absolute terms and in dollars per inhabitant. In absolute terms, the list of major receivers of aid development has changed since the beginning of the 1990s (map 11-16). The countries of the Balkans and of Central and Eastern Europe received small amounts of assistance in the first half of the 1990s. Their share has even sharply increased throughout the whole period up to 2004. The amounts received by CIS countries have either increased (Caucasian countries) or decreased (Russian Federation, Ukraine, Central Asia). Apart from Iraq the amounts received by Middle East (Egypt, Palestinian Authority, etc.) and North Africa have also decreased. In the same time, those received by Sahelian countries remained stable. In dollars per capita (map 11-17), the top list of receiving countries is not quite the same. The two following maps allow to qualify what is said above about the weakness of aid flows oriented to Northern Africa compared to Central and Eastern Europe. The major receivers are countries of the Middle East, Western Balkans and some countries of Central and Eastern Europe and Caucasus. The maps show that the gap between Northern Africa and central Europe is not that wide. There are doubtlessly huge difference between the Western Balkans and Northern Africa. But Morocco, Tunisia and Egypt have received roughly the same amounts of dollar per inhabitant as many CEE Countries.

227

Map 11-16 : Total net official development assistance to the EU neighbourhood from 2001 to 2004.

Map 11-17 : Net official development assistance per inhabitant in the EU neighbourhood from 2001 to 2004.

228

The share of EU (map 11-18 & 11-19) in the flows oriented to the neighbourhood of EU 15 varies a lot. It is not surprising that its share is higher in the CEE countries, which are no more neighbour countries since they are full members), in the Balkans and in the Maghreb countries. But its share is lower in the Near and Middle East. Besides, one can notice several evolutions since 1990: - A slight but regular decrease of the share of EU (EU 15 + European Commission) in Northern Africa. - A significant decrease in the Near and Middle East and in the CIS. - A relative stability in the Western Balkans where the reconstruction and the financial support of fragile economies is largely supported by EU (CARDS programme and other financial assistance). Meanwhile, the Near and Middle East receives more development assistance from the United States than from the EU (map 11-21). US assistance is very much focused toward a few countries. In absolute terms, it is concentrated in Israel, Iraq, Jordan and Egypt. In percentage terms, it dominates in Israel, Jordan, Iraq and also in Russia. Such a geographical distribution is not really traditional. Only Israel received significant amounts of development assistance in the 1990s while the other countries did not. The recent increase in Iraq is due to the reconstruction of the country after the war. Besides, it is clear that Turkey is much more supported by EU than by the United States. At last, the aid disbursed by the Arab countries (map 11-22) and development agencies is very much focused on the Middle East (Arabic peninsula), in the East Mediterranean (Palestinian territories, Turkey, etc.). Generally speaking, their share on the assistance is not dominant but significant in many countries located in Central Asia, in the Caucasus, in Northern Africa and even in the Balkans (Albania, Bosnia) where the Muslim populations are in majority.

229

Map 11-18 : Net official development assistance to the EU neighbourhood and share of the EU (Commission + EU 15 members) from 1991 to 1995.

Map 11-19 : Net official development assistance to the EU neighbourhood and share of the EU

(Commission + EU 15 members) from 1996 to 2000.

Map 11-20 : Net official development assistance to the EU neighbourhood and share of the EU

(Commission + EU 15 members) from 2001 to 2004.

230

Map 11-21 : Official development assistance to the EU neighbourhood and share of the USA from 2001 to 2004.

Map 11-22 : Official development assistance to the EU neighbourhood and share of the Arab

countries and Arab agencies from 2001 to 2004.

11.2.4 Flows - Workers remittances Workers remittances constitute a huge amount of financial flows (hundreds of annual billions dollars worldwide). OECD and the World Bank have recently created a working group to study these flows, which have several advantages for the developing countries: (i) they are often bigger than public international subsidies, and sometimes than the FDI inflows; (ii) they show quite stable, which is accurate for development strategies; (iii) they are bottom up (individual workers send money to their individual family), which prevents from corruption or bad governance and is good for local projects. The region entails several of the largest beneficiaries of these flows in the world: Jordan, Morocco, then Tunisia, Lebanon... The numbers have been decreasing in the European countries that used to be emigrant countries: see the case of

231

Portugal and Malta for instance in fig. XX. They show quite stable and high in the southern neighbouring: for Jordan, Morocco and Tunisia, remittances are some sort of a “build in” component of development. It used to be the case in Egypt, but the return of the enormous mass of migrant workers from Libya and the Gulf since a decade has lowered this financial manna. The most erratic evolution in the one of Lebanon, whose diaspora, that boomed during the civil war, constitutes along with the banking sector the main source of national revenues. Remittances are useful revenues, but they are in fact a mixed blessing. In the case of countries that depend highly – and more and more in the case of Egypt for instance – on rent economy, remittances are a part of the difficulty. Many Arabic countries hardly make profits, they rely on rent revenues, internally (urban land and real estates revenues) and internationally (remittances, tourism, oil, Suez Canal’s fees for Egypt). The WB report on development in the Arab world (World Bank 2004) criticizes that this rent economy runs the bulk of relations between Europe and its southern neighbours. Turkey shows another profile: the share of remittances in the GDP has been declining since the end of the 1990ies, thanks to the overall economic development (growth of GDP) and to the rise of a true productive system, generating profits rather than rent incomes. That is also the path followed by CEEC by the way (see Poland). Some new players appear in the south-eastern neighbouring: Albania after the country was opened a decade ago, which provoked a soaring emigration to Greece (that would host today almost a million Albanese?); Moldavia since 2000, and Serbia too since the middle of the 1990ies (linked to a new emigration?). On the contrary Bosnians seem to have returned to their country, and reduce remittances. Much work is still to be done on this linked remittances and migration regional geography.

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Table 11-10 : Workers’ remittances (current $), in % of the GDP

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

Portugal

EU Monetary

Malta

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

Jordan

Morocco

Lebanon

Tunisia

Egypt Arab R.

Turkey

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

Serbia & M.

AlbaniaBosnia-H.

Moldova

GeorgiaPoland

Source: Word Bank

233

11.2.5 Flows – Tourism Tourism flows show the quite high degree of regional integration. The countries of the region make roughly 90% of their tourism exchanges within the region (fig. XX). Transmediterranean flows have somewhat decreased since 2001 09/11, but they have almost recovered, and the rise of Turkish destinations has largely counterbalanced these Mediterranean losses. Table 11-11 gives the number for the arrivals in Egypt: 52 tourists out of 100 who arrive in Egypt, come from Western Europe, 4 from the CEEC, 9 from the NIS, 13 from the Meda countries and Turkey, 10 from the Middle East. Very few indeed – and less and less – come from other regions (3 from Northern America, 4 from Asia, see figure 11-17 too). Undoubtedly, tourism mobility is growing in the euromediterranean region (that is Espon + neighbours) as a whole. Of course tourism is only a peculiar index of mobility. But it clearly demonstrates that this growing mobility is a strong component of the regional pattern.

Table 11-11 : Destination (Germans, Spanish) and origin (Egypt) of tourists, %

From Germany From Spain to Egypt

ann. average 2001-

04 ann. average 2001-

04 ann. average 2001-03 Western Europe 77,4 84,2 51,9 CEEC and NIS 8,7 3,4 12,9 Turkey 4,3 0,5 0,5 North Africa and Middle East 2,7 2,6 22,5 Σ European Region 93,2 90,6 87,8 Americas 3,5 7,3 3,8 South & South-East Asia, Oceania 2,5 1,7 4,9 Sub-Saharian Africa 0,8 0,4 2,1 Total 100,0 100,0 100,0 (number, millions) (77) (18) (5)

Source: OMT Yearbook of tourism statistics, 2003.

234

Figure 11-16 : Tourism flows in the European region Arrival of non resident tourists at national borders, and %

in countries’ population in 2004

Destination of German tourists (annual average 2001-

2004) and evolution (1997-2004)

Destination of Spanish tourists (annual average 2001-2004) and evolution (1997-2004)

Origin of tourists in Egypt (annual average 2001-03) and

evolution (1997-2003)

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11.2.6 Flows - International migrations Northern America has been the dominant receiver of international migrations during the second half of the XXe century, both with respect to the relative size of net in-migration and of the total number of international migrants. But the importance of EU in the geography of migrations has been growing since the 1980s up to present. According to the data provided by OECD, EU has become a major receiver and is on the way to catch up with the United States. Meanwhile, the international migrations flows between EU members have stayed at a very low level although there is a total liberty of movement inside the EU territory for EU citizens. Despite a strong process of globalization, the migration issue from neighbour countries is a major subject of concern for EU members for several reasons: - As far as the North South model of regional integration is concerned, it is impossible for EU to reorganize its value chain on a wider territorial base, encompassing neighbour countries, if these countries are deprived from their highly skilled and educated workers. - Europe should take care of recent developments with growing flows of highly educated workers from Northern Africa to Northern America whereas those who leave this region to Europe are less educated (Fargues, 2005). To study the international migration flows is very challenging. There are many types on international migration flows: migrations of workers, migrations of refugees, definitive or temporary migrations, local and long distance flows, etc. There is no unified statistical tool: each country utilizes its own definitions which are often not strictly comparable to those implemented in other countries. Many countries, especially the developing countries, do not provide the analysts with data about out-migrations. This explains why the in-migration flows are much better known than the out-migration ones. Consequently, there is generally no correspondence between data provided by Mediterranean and European countries about the trans-Mediterranean migrations. This data problem also explains why the South-North flows are better known than the South-South ones, and why they are analysed from the point of view of the receiving countries (that is Northern America, European countries, etc.). For instance, Middle East (Arabic peninsula mainly) is a major migration destination, but one would hardly find reliable data about the flows converging to this region. Besides, a significant part of the migration flows is composed by illegal migrants. Although many reports regularly try to do so, it is hardly possible to give any relevant estimation of their number, especially because a majority of them legally enter their country of destination, with a tourist visa for example. At last, the geography of international migrations is more and more complex: the traditional regional patterns, mainly based on proximity and eventually former colonial relations, are step by step replaced by more distant flows. In addition, former

236

regions of departure have also become regions of destination – this is the case of Maghreb for example. Nevertheless, the available statistical sources and several reports make possible a study of migration flows between EU (ESPON) and the neighbourhood countries. This subpart aims at answering the following questions: what is the relative importance of neighbouring countries in the migrations flows oriented to EU and ESPON? Is there one or several neighbourhoods - each one being characterized by its on migration patterns? What is the impact of migrations coming from the neighbourhood in the internal ESPON territory?

11.2.6.1 What is the relative importance of the neighbourhood in the migration flows converging towards European Union and ESPOIN space?

Throughout the 1980s and 1990s up to now, the neighbourhood has been a major origin of the migrants coming to Europe (see Final Report – Volume 1 – Map 45 – Page 129). There are tight relations between France and Northern Africa countries for example. These relations between both shores of the Mediterranean have even been reinforced in the 1980s since countries such as Italy and Spain have become major in-migration countries. In the 1990s, these traditional flows have been brutally combined with new kinds of flows coming from the Eastern neighbourhood and the Balkan countries. First, after the collapse of the socialist bloc, migration flows coming from Central and Eastern Europe (mainly for economic reasons or even eco-ethnic reasons in the case of the German Aussiedlers) have grown up rapidly. But they were never as massive as those coming from the South. Secondly, because of the long lasting political instability of the Balkans, Western Europe had to handle massive flows of refugees coming from former Yugoslavia (mainly form Bosnia). It is impossible to evaluate the relative importance of the flows coming from the neighbourhood in the total of flows converging to EU and ESPON. The statistical sources of receiving countries are not based on the same statistical definitions. Nevertheless, the existing sources allow us to draw some conclusions. In the 1990s and in the 2000s, the international migrants who entered EU countries and who came from other EU countries were a minority in the total flows: around 25 % per year. Those who came from the neighbourhood (Northern Africa, Near and Middle East, Turkey, Balkans, CEE countries and Western CIS) represented between 40 and 45 % of the whole (OECD, 2005). As far as the stock of foreign of population residing in the EU is concerned, the importance of the neighbouring country is also high. It is estimated that roughly 20 million foreigners lived in EU before its enlargement in 2004. Among this

237

total, only 5 million came from EU. According to a study recently released by the CARIM (Fargues, 2005), in 2002 5.8 million came from the South and East Mediterranean countries. A large majority were of Turkish (around 2.7 million), Moroccan (around 1.6 million, see Final Report – Volume 1 – Part C – Box 7 and Volume 3 – Case study about Morocco) and Algerian (around 0.75 million). That means that the migrants from all neighbour countries represent largely more than one half of the total. It is more difficult to give any comprehensive appraisal of the share of residing migrants coming from Balkans and the CIS because of serious data gaps. According to the OECD, they represent a large share of foreigners in certain ESPON states: more than 24% in Switzerland in 2001, 45.3% in Austria, 13.5% in Germany, 13 % in Denmark and roughly 10 % in Hungary (OECD, 2005). Their number was higher in the 1990, while and just after the war in former Yugoslavia. The importance of EU and ESPON as destinations for the migrants coming from neighbour countries is high in certain cases. But it is difficult to measure the share of EU and ESPON as destinations in the out-migrations flows, because of data gaps in the countries of origin. The CARIM estimates that there are between 10 and 15 million international migrants coming from South and East Mediterranean countries in the World (first generation only). A bit less than half of them are living in EU. Besides, there is no doubt that a majority of the migrants who also left Eastern neighbours are residing in the EU territory. One can see an increase of the flows coming from CIS in Czech Republic and in Hungary for example. Their number has also been growing in West European countries such as Germany, Italy and Portugal since the beginning of the 2000 but we still miss precise studies about the size of such flows.

11.2.6.2 Is there one or several neighbourhoods?

One can not consider the neighbourhood as a homogeneous whole. Not all the migration flows coming from neighbour countries are oriented to EU. Some neighbour countries send much more migrants to the rest of the world. Some of them are even destination countries and show positive net-migration rates while others have negative rates. To these respects, one can distinguish several sub-regions in the EU neighbourhood, characterized by various patterns of migrations. The main difference lies between the Southern and the Eastern neighbourhoods. The South and East Mediterranean countries emit much more out-migration flows than the Eastern neighbours. Only the former Yugoslavia could be compared to Mediterranean countries but only in the 1990s, for the out migrations from this

238

region have strongly decreased since the beginning of the 2000s, as it is shown by the graph below based on the German example.

Figure 11-17 : Inflows of migrants coming to Germany from the Balkans

Inflows of migrants coming to Germany from the Balkans

0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

160,0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Thou

sand

s Fed. Rep. of YugoslaviaRomania

CroatiaBosnia-Herzegovina

The huge difference between South neighbours and others is due to very different demographic situations. A majority of eastern neighbours show bad demographic performances since the end of the 1980s and have even lost population. They are themselves in need of migrants, as it is the case in Russia whose migration rate has been positive most of the time since the outbreak of the USSR. That is why the flows coming from the East have never been as massive as they were expected – or feared – to be by the Western European countries in the beginning of the 1990s. The migration rate was still positive in 2003 in Russia, but the flows have been sharply falling since the 1990s. Since 2005, President Vladimir Putin tries to change the Russian legislation related to the acquisition of citizenship and to the management of migration flows. This decision has been followed by new bills voted by the State Duma, which aim at attracting especially ethnic Russian who still live in former Soviet Republics. According to various sources, the number of illegal migrants in the Russian Federation lies between 7 and 14 million but Russia must face up with a serious demographic deficit (see table below).

Table 11-12 : Evolution of population in CIS neighbours

1990 1995 2000 2004 Russian Federation 148292000 148141000 146303000 143849600 Ukraine 51892000 51512300 49175850 47451290 Moldova 4363950 4338750 4274639 4217911 Source: World Bank

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Figure 11-18 : Migration flows to and from Russia

Migrations flows to and from Russia

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Middle East countries also send relatively few migrants to EU. Those who leave Syria, Jordan and Egypt are going mostly to oil producing countries of the Persian Gulf and mainly to Saudi Arabia where the needs for workers are high. In almost all the countries of the Arabic peninsula, the international migrants represent more than half of the labour force. Middle East foreign residents almost never appear in the top list origins in the OECD members, except for Irak. But, in this case, these migrants are probably composed by a significant share of refugees. A large majority of migrants who leave Algeria, Morocco, Turkey and Tunisia go to EU. Whereas those who leave Egypt mainly go to Arab countries, and those who leave Lebanon go to other countries (mainly in Northern America). Almost all the temporary Egyptian labour force working abroad in 1999 (1.9 million) was concentrated in the Middle East countries: 924 000 in Saudi Arabia, 333 000 in Libya, 227 000 in Jordan, 191 000 in Kuweit, 95 000 in the United Arab Emirates (Fargues, 2000; Wihtol de Wenden, 2005). The situation is almost the same in the former USSR where Russia attracts the majority of migrants who decide to leave CIS countries (de Tinguy, 2004). But the situation has been changing since the middle of the 1990. It seems that the migratory system of Russia is getting step by step less CIS based and more connected to the rest of Europe. As far as the out-migration flows from Russia are concerned, the share of non CIS countries as destination countries is now the same as that of CIS countries; the sole Germany represents roughly 40% of the total outflow leaving the Federation (Goskomstat Rossii, 2005).

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Figure 11-19 : Migration flow from and to the Russia Federation

Migration flow from and to the Russian Federation

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At last, it is possible to distinguish different kinds of neighbourhood with respect to the evolution of their migration rate. The box below shows that it is impossible to draw a unique view – thus an unique policy – of migrations in the neighbourhood. Migration rates in the neighbourhood : a great variety of situations In the Soviet bloc, during the period up to the end of the 1980s, the net-migration rates were relatively stable. During the 1990s, they began to drop. Especially sharp was the fall in Armenia and Georgia. The explanation is probably the same as for the Baltic States – the Russians returned home (one indication that many Russians went back home during the 1990s is that Russia shows a small but constant upward trend, from negative to positive; this trend seems to develop). Besides, the three Caucasian states (Armenia, Azerbaijan and Georgia) are localised in an area with wars, conflicts and disorder – things that hamper immigration and stimulate emigration. Moldova has shifted from being an immigration part of the Soviet Block, to a country with a relatively high migration deficit nowadays. It is a small country with low living standard – one of the lowest in Europe – and many people seem to try to find a way out of the situation by emigrating westwards. Ukraine is another country that has transferred from being an immigration to an emigration country. In this case it is probably the Russians that have returned but migration westwards is another part of the explanation. On the other hand, Belarus shows an upward trend regarding net-migration. From being an emigration part of Russia, it is today a country with net-immigration.

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All the three countries in Central Asia - Kazakhstan, Turkmenistan and Uzbekistan - have experienced long-term negative development with respect to the migration rates. The Maghreb countries experienced different migration patterns during the second half of the 20th century. During this time, many political events took place and these countries lost their colonial ties during the 1950s. Morocco, Algeria and Tunisia have had negative migration rates during all the period. Libya shows quite another pattern; in this case the immigrants are probably coming from the surrounding countries in Africa. Mashreck is also a region that has been characterised by wars, conflicts and turmoil during all the time since WWII. Despite this, Israel has had a migration surplus during all the time since the nation was founded. There also seems to be two peaks in the net-immigration rates: one during the 1950s and 1960s and one in the beginning of the 1990s. The other countries, with the exception of Egypt, have very fluctuating migration rates. The Palestinian migration rate has, however, been relatively constant since the beginning of the 1970s. Egypt has had a relatively stable net-migration rate since the beginning of the 1950s. Since the beginning of the 1970s it has been negative. In the second half of the 1970s, it was 150,000 persons annually on an average and during the second part of the 1990s the migration deficit was 100,000 persons yearly on average. In the Arabic peninsula and the Persian Gulf, most of the countries have had migration surplus almost all the time. The Kuwait-war had also a clear impact. Kuwait lost one fourth to one third of its population as en effect of net-emigration between 1985/90 and 1990/95. A lot of people working in the service sector have come from other parts of the World – e.g. Asia and from the former Soviet bloc – and this has contributed to the immigration surplus.

11.2.6.3 What is the impact of migrations coming from the neighbourhood in the internal ESPON territory?

All over the world, there is a diversification of migration flows (Bernard, 2002; Castles and Miller, 2003; Simon, 1995). They are still mainly based on the proximity between countries of origin and countries of destination. But this pattern is not predominant anymore. Foreign residents residing in EU are more and more coming from non neighbour countries: Senegal, Pakistan, Afghanistan, China, Sri Lanka and so on. It is possible to make some distinction between EU countries with respect to the relative importance of migrants coming either form neighbour or from non neighbour countries. The process of diversification is obvious in the table below, showing the example of France. Mediterranean

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countries still top the list of origins but new ones appeared in the 1990s, such as Brazil, Democratic Republic of Congo, Japan, China and even Russia.

Table 11-13 : France, main inflows of foreign population by nationality (thousands)

Country of origin b 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Morocco 16,4 13,8 8,1 6,6 6,6 10,3 16,1 14,1 16,9 18,7 Algeria 12,3 13,1 9,7 8,4 7,8 12,2 16,7 11,4 12,4 15,1 Turkey 9,2 6,8 4,7 3,6 3,4 5,1 6,8 5,7 6,6 6,9 Tunisia 4,0 3,5 2,3 1,9 2,2 3,6 5,3 4,0 5,6 6,5 United States .. .. 2,4 2,4 2,7 .. .. 2,7 2,6 2,6 China .. .. 1,3 0,9 0,7 2,8 5,7 1,7 1,8 2,1 Haiti .. 3,2 1,9 1,4 0,8 1,9 1,9 1,4 1,8 2,1 Sri Lanka .. .. .. 0,8 0,9 .. .. 1,2 1,3 2,1 Japan 1,3 1,2 1,1 1,0 1,1 1,2 1,1 1,4 1,2 1,4 Switzerland .. .. .. .. .. .. .. .. 1,4 1,4 Fed. Rep. of Yugoslavia .. .. .. .. .. .. .. 1,4 1,2 1,4 Romania 1,1 1,0 0,7 0,6 0,5 0,6 0,9 0,9 1,1 1,4 Russian Federation .. .. .. .. 0,6 0,7 0,9 1,0 1,1 1,4 Dem. Rep. of Congo .. 2,2 1,3 0,9 0,9 2,9 4,6 1,5 1,0 1,3 Brazil .. .. .. 0,9 0,7 0,6 0,7 0,8 1,0 1,2 Total .. .. 91,5 77,0 75,5 102,4 139,5 114,9 126,8 141,0

Source: OECD, 2005 Some ESPON countries are not very much concerned by the migrations coming from the neighbourhood. But they are very few and they are mainly located in Northern Europe: United Kingdom, Luxembourg, Portugal and, to a certain extent, Sweden. In Luxembourg, the majority of foreign residents come from EU countries. Not surprisingly, Luxembourg is incidentally the only EU members where European Union is the first reference of identification, before the national reference. In Portugal, despite the increase of residents coming from CEE countries (Romania, Ukraine) in the last few years, the majority of them come from former colonies: Southern Africa, Guinea Bissau, Brazil, Cape Verde… Neighbouring counties do not appear in the top list of origins among resident. And it is the same for the migrations flows.

Table 11-14 : Portugal, major origins of foreign population (stock) by nationality (thousands)

1989 1991 1996 2001 Cape Verde 28,0 29,7 39,6 49,9 Brazil 10,5 12,7 20,0 23,5 Angola 4,8 5,7 16,3 22,6 Guinea Bissau 3,4 4,8 12,6 17,6 United Kingdom 7,8 8,9 12,0 15,0 Spain 7,3 7,6 9,3 13,6 Germany 4,5 5,1 7,9 11,1 United States 6,4 7,2 8,5 8,1

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France 3,0 3,4 5,1 7,8 Sao Tome and P. 1,9 2,2 4,2 6,2 Mozambique 3,0 3,4 4,4 4,7 Netherlands 1,7 1,9 2,9 4,5 China 1,1 1,4 2,4 3,9 Venezuela 4,9 5,1 4,2 3,5 Italy 1,1 1,2 2,0 3,4 Total 101,0 114,0 172,9 223,6 Source: OECD, 2005

The features of UK’s migratory system are very close to those of Portugal with a majority of foreign residents coming from distant countries and namely the former colonial empire: India, United States, Pakistan, Somalia, South Africa, Sri Lanka, Jamaica… From neighbour countries, only Former Yugoslavia appears in this list, at the 14th rank. In all other countries, the residents coming from neighbour countries represent a significant proportion of the total number of foreign residents. It is possible to make distinction between them in taking into account their origins (OECD, 2005). The extreme situation is shown by Austria, where former Yugoslavian and Turkish residents represent together almost 70% of the total foreign population residing in the country. Countries such as France, Belgium and Netherlands are strongly related to the South Mediterranean countries. In Netherlands, residents of Turkish and Moroccan nationality represented 30% of all foreign residents in 2001. In France, those of Turkish, Moroccan, Tunisian and Algerian nationality represent 41 % of the total. In other countries such as Spain, Switzerland and Italy, the foreign residents mainly come from Mediterranean countries and from South Eastern Europe (Balkan countries or Romania). In Hungary and Czech Republic, the majority come from former USSR, former Yugoslavia, Romania and Bulgaria. Sweden is more oriented to Near and Middle East and to former Yugoslavia. At last, in Finland, foreign residents of Russia nationality represented more than 22% of the total.

11.3 Regional policies 11.3.1 The ambition of the European Neighbourhood Policy Launched by the Commission in 2003, the European Neighbourhoods Policy (ENP) aims at unifying various existing policies and budgets: Meda, Phare, Tacis etc. The new Partnership financial Instrument concerns: (i) Nine Mediterranean countries: those of the former Barcelona process, minus Turkey (that will benefit from a specific budget), Cyprus and Malta (now member states), plus Libya. (ii) The three Caucasian countries (Azerbaijan, Armenia, Georgia)

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(iii) The three NIS that are located between UE and Russia (Moldavia, Ukraine, Belarus - but the latter is still not included for political reasons). European Balkans countries are not included because they are potentially state members. Neither is Russia, because of a specific strategic agreement with EU, which general goals are nevertheless quite similar to the ENP’s: create a common space for trade, capital, migrations, training, culture, and security. The idea is to “share everything but institutions”, in order to develop one integrated region that would encompass the EU and its neighbours. The ENP enhances a common tool, the Action Plans (definition of specific goals for each neighbouring country, with a three to five years programme of precise actions – energy, transports, governance…). The budget could be around 15 billion euros (2007-2013), to be compared to the 8,4 billions for the 2000-2006 period. Yet, this view is hampered both eastward and southward. Eastward, the Ukrainian call for membership since December 2004 presidential elections, raises a tough political issue with Russia. Southward, the recent Barcelona Summit in November 2005 (for the tenth anniversary of the first Agreements), which was supposed to enhance the Mediterranean partnership through this ambitious European Neighbourhoods Policy, was a crude failure: whereas all UE states where represented by the head of their government, only two Mediterranean partners sent theirs. What are the reasons of this failure? 11.3.2 The shortcomings of the Barcelona process The Barcelona Agreements, which entailed an economic chapter (enhancing market economy and launch a free trade area in 2010), a political and a cultural chapters, had created a great hope. Ten years after, everyone can see the positive steps. First, the Barcelona process is a quite unanimously accepted policy. Its goals are shared by all the countries involved. Its procedures are making cooperation more natural; it is the only forum where European and South Mediterranean countries representatives – and namely where Israelis and Arabs officials – attend the same conferences. Second, the Association Agreements have become a well known framework for bilateral (UE/Med partner) and regional economic cooperation. Some have been signed very recently (Syria’s is still to be confirmed) but many came into force several years ago (Palestine, Israel, Morocco, Tunisia and Turkey are the eldest). A set of technical committees and sub-committees ensure practical implementation of the agreements; they progressively build the habit of a partnership in the Region. Third, the institutionalisation of the partnership has gone a step further in Mach 2004, when the Euro-Mediterranean Parliamentary Assembly (EMPA) held in Athens its inaugural meeting. In 2005, the EMPA held its plenary session in

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Cairo, and the Anna Lindh Euro-Mediterranean Foundation for the Dialogue between Cultures (financed by all partner countries and the Commission), devoted to the civil society networking, intellectual and cultural exchanges, was inaugurated in April in Alexandria. Forth, networking among civil societies through NGOs has developed North-South and also South-South. But shortcomings are real too. They go far beyond the conflict between Israel and Palestine, beyond the effects of international terrorism or of the war in Iraq. First they are economic. Economic reforms remain insufficient in the southern shore of the Mediterranean. In these countries except in Turkey, the activity remains dominated by the rent economy, whether it stems from oil and gas, tourism, or foreign aid. Such a system explains why corruption is rampant. This is the reason why the economic gap between the two shores has been increasing in the last years, despite the Association Agreements. These are bad conditions to prepare a free trade zone, which could be as dangerous for the Southern neighbours’ balance of trade as the free trade agreement with the EU had been a decade ago for Turkey’s. Second, they are political. The South sees the ENP as a form of compensation for countries that would never be allowed to enter the Union. This is mostly the case for Turkey, but it is also true for the other countries. The ENP policy seems badly accepted because it was not created by a negotiation process between the South and the North like before the Barcelona agreements of 1995; the word of “neighbour” makes a really dissymmetric sound... In fact, the South sees more and more Europe as a fortress, with huge financial means dedicated to the promotion of the “integrated border management” in the neighbouring countries (e.g. Melilla’s equipments financed by the EU) in order to fight against illegal immigrants. This strongly security-oriented treatment of the region’s instability hampers the progress of democracy in the South, and hampers in the North the idea of a Mediterranean cooperation. Third, they are geographic. The southern neighbours do not feel that the EU demonstrates a real integrated view of the region, encompassing both eastern and southern neighbours. They believe that the Union has a limited interest in the South of the Mediterranean compared to central and eastern European countries. Of course there is no clear consensual opinion in the southern shore that these countries should actively promote a common region with Europe. But all the same, the idea is rising that the new world context calls for regional groupings, to cope with eastern Asia or Latin America (see for instance the growing competition for food industry including for “Mediterranean” products, that comes from the industrialised south American agriculture, namely Chilean and Argentinean). Such a regional grouping can not be just an extension of the Barcelona agreements of ten years ago. Obsessed by the security issue, the

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2005 Barcelona summit did not propose really ambitious regional policies focused on key sectors such as agricultural trade in the framework of a win-win regional pattern, qualifying migration and higher education. Furthermore, the proposed bilateral cooperation (Action Plans) risks to jeopardize the regional Euromed partnership by reducing the multilateral actions of the former Barcelona process, and by diluting it in a vast ENP whose winners are most likely to be located at the East of Europe. What southern neighbours fear is a rising competition between them and eastern neighbours to catch the ENP subsidies. Are they right? A piece of answer is given by the numbers of the past decade. The UE has spent six billion euros in the Barcelona process (table 11-15). But only a half have been really paid, because of weak capability of southern partners (namely Algeria and Syria) to fulfil the technical European requirements for applicants. Their capability has improved lately; besides, the UE has settled down a Delegation in each of these countries which ameliorates this administrative and technical relationship. But all the same, the difference between EU’s subsidies to the South and to the East is striking. During the 1995-2004 period, the EU has spent 20 billion euros for the CEEC but only 3,2 for the Mediterranean partners. In other words, European’s subsidies reached 27 € per inhabitant in the CEEC and less than 2 in the Mediterranean.

Table 11-15 : EU’s subsidies to the CEEC and the Mediterranean partners Annual average, 1995-2004

million € € / inhabitant

MEDA countries : -West Bank & Gaza 38,2 10,0 -Jordan 35,1 6,1 -Tunisia 48,6 4,8 -Lebanon 10,5 2,8 -Morocco 57,1 1,8 -Egypt 51,7 0,7 -Algeria 10,5 0,3 -Syria 3,9 0,2 Together 255,5 1,4 CEEC 1 996,7 27,0

Note. Regional cooperation MEDA funds (70 M € / year, spent for several southern countries altogether) are not taken into account. Source : European Commission

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References:

• Eurostat, 2005 : « External Trade of Western Balkan Countries », Statistics in focus, External trade, 1-2005.

• Fargues, Ph., 2000, Générations arabes. L’alchimie du nombre, Paris, Fayard.

• Fargues, Ph., 2005 (ed.), Mediterranean Migrations, 2005 Report, CARIM, Freudenberg, M., Gaulier, G., Ünal-Kesenci, D., 2005, « La régionalisation du commerce international : une évaluation par les intensités relatives bilatérales », CEPII, Document de travail n°98-05.

• European Commission, Robert Schuman Centre for Advanced Studies. • OECD, 2006, International Migration Outlook, Paris. • OECD, 2005, Trends in International Migrations 2004, Paris. • Rossijskij Statisticeskij Ejegodnik, Goskomstat Rossii, 2000 and 2005

editions. • Saint Laurent B., Saint Martin C., Jaffrin S., 2006, « Les IDE dans la région

MEDA en 2005 », Notes & Documents n°20, AFII, Anima. • Tinguy, A. de, 2004, La grande migration. La Russie et les Russes depuis

l’ouverture du rideau de fer, Paris, Plon. • Wihtol de Wenden, C., 1999, L’immigration en Europe, Paris, La

Documentation française. Wihtol de Wenden, C., 2005, Atlas des migrations internationales, Paris, Autrement.

• World Bank, 2004, The World Bank, Development Report – Unlocking the Employment Potential in the Middle East and North Africa: Toward a New Social Contract, Washington.

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12 MENTAL MAP THEMATIC ANALYSIS

12.1 Firms, Countries, International Organisations and NGOs’s: World regionalisation

Clarisse Didelon UMS-RIATE

12.1.1 Introduction International Organisations, Countries, Non Governmental Organisations and global private firms are the main actors at the global level. They divide the World in order to administrate it, to locate their activities and to organize their relations with other countries / groups of countries: in other words, to exert their power practically or symbolically17. Those divisions of the World are often available on the different tools used by global actors for their communication. Those tools can be either reports (for example the “World Development Report” from the World Bank), or electronic supports like CD-Rom, or websites. In this study the maps and divisions of the World mainly come from the websites. All maps have been collected approximately within the same period of time running from summer to fall 2005. One should keep in mind that the representations of the World that are published on websites are not necessary operational division of the World used by the World actors. However, as they are exposed before public opinion, it has been assumed that those maps have necessarily some meaning for the actors and are at less the sign or the symbol of their power at the World scale. The main questions that we will try to answer in this part are the following ones: Do all actors divide the World in the same way? Which criteria are they explicitly or implicitly using? What can we learn from their maps concerning their vision of the World? The methodology for the building of the databases and their computation will be presented in a first step. Then, the criteria that seem to have been used by the actors will be presented.

17 As explained by C. Raffestin, the fact to establish territorial division is always the sign of a power.

States have the monopole of official internal division inside their borders. Global actors do the same at World Scale but nobody has a monopole of an official division of the World.

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12.1.2 Methodology The analysis of the divisions of the World by global actors is quite different from that displayed in the survey on ESPON community (Cf. Case Study: Europe and the World, The ESPON community’s point of view), although it is based on the same principles. The reason is that, contrary to the survey, there is no “normalised” way for the firms to let one know what their divisions of the World are. The sources are quite different and may raise problem for the interpretations of the results because there is generally no information available about the criteria used to divide the World. The same methodology has been used to build the databases for International Organisations, Countries, Non Governmental Organisations and private firms. That allows us to make comparisons between the different kinds of World divisions produced by those global actors. In a first step, the strategy used to build the database will be presented and then the methodology used to formalize and interpret the results. 12.1.3 How we build the data base The choice of the sample of actors International public Organisation. International organisations are many and some of them have mainly a regional orientation, for example the European Union and North American Free Trade Agreement (NAFTA). To know which International Organisation exists, a list available on a Canadian website has been used: < www.collectionscanada.ca>. All those organisations websites have been checked and 19 maps or lists of divisions of the World have been collected. Some of them present the subdivisions of an upper level regionalisation. It is the case for example for United Nations which provides three different divisions of the World. The International Organisations included in the survey are the following ones : United Nations, World Bank, United Nations Educational, Scientific and Cultural Organization (UNESCO), World Tourism Organisation (WTO), United Nation Children’s Fund (UNICEF), United Nation Refugees Agency (UNHCR), International Labour Organisation (ILO), World Meteorological Organisation (WMO), Universal Post Union (UPU), World Health Organisation (WHO), International Telecommunication Union (ITU), World Trade Organisation (WTO), International Monetary Fund (IMF) and finally Food and Agriculture Organisation (FAO). It is interesting to observe that despite the fact that all these organisations belongs to the UN system, they do not use any common framework which means that UN is rather an umbrella than a real power at World scale. The context of the proposed divisions is quite different from one website to another. It could be the list of the member States of the International Organisation. That

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means that the list is not exhaustive as not all countries are members of all the organisations. So far, 32 countries from our list of 168 countries are not members of the OMT “Organisation Mondiale du Tourisme”. Countries. As it was not possible, actually, to collect all the maps and regions produced by all the countries of the World, it has been decided to take into account only the documents produced by the countries that are commonly recognised as the main actors of the World, i.e. the countries that are susceptible to have a great influence at the World level. It has been decided to take into account the five permanent members of the security council of the United Nation (China, United-States, Russia Federation, France, United Kingdom) and the countries which belong to the informal but powerful G8 (the same as the previous ones excepting China, together with Germany, Canada, Italy and Japan)18. Maps have been collected for all those countries on the Foreign Policy or Foreign Affairs ministries websites, except for Russian Federation whose website is unusable for a non Russian speaker. Non Governmental organisations. It was especially difficult to select main NGOs (Non Governmental Organisations) of the World and to check their divisions of the World. Moreover, a large number of them are very small ones. They act locally and they do not need to produce divisions of the World. The research has concentrated on NGOs having global ambitions. We have first tried to identify global NGOs by searching “Transnational NGOs”, “Global NGOs”, “International NGOs” (and the equivalent expressions in French) on the Google website. Then we used two main lists of global NGOs (one in French, one in English). The first one is published on <http://www.toile.org/psi/ong/html> and the second one is available on <http://billie.lib.duke.edu/pubdocs/ngo/transnational.asp>. The main problem with this group of actors is that the lists by World regions provided by them are generally lists of countries associated with types of actions. Therefore, those lists are too much incomplete to be used as a support in the study of World divisions. Only eleven maps and divisions of the World have been collected from the NGOs list (Table 12-1). Private firms. The number of private firms in the World is high, even when taking into account only firms having a global orientation. It was not possible to collect the division of the World for all of them. Moreover, the firms had to be large enough to have a worldwide presence. In a first step, it has been decided to study only European firms and then to shorten the list to collect only maps displayed by the firms included in the stock market index of their countries. The three main financial markets of Europe have then been selected and finally only

18 Alternative approach could be based one the World share of population of GDP and/or population

including therefore other countries like India, Brazil or Indonesia.

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the firms from the CAC 40 (40 firms), FTSE 100 (102 firms) and DAX (30 firms) indexes have been studied. All the private companies included in those indexes are generally (but not always) oriented towards the global market, but they do not necessarily provide their websites with their divisions of the World.

Table 12-1 : list of NGOs

Amnesty International - Large regions

Amnesty International – Sub regions

Derechos Human Rights

Directory of Development Organisations

Human rights watch

OXFAM

World Conservation Union

Médecins sans frontière

Reporter sans frontière

Red Cross

Red Crescent

Different kinds of maps: a first vision of the World The raw material (i.e. maps published on the websites) already provides precious information on how the firms or other actors perceive the World, or on the way they want to show to the public their perception of the World. Three major kinds of maps available on websites can be roughly identified. The first one, Pernod-Ricard, presents a clear division of the World in form of territorial partition19 (figure 12-1). The Cadbury-Schweppes one shows the will to consider the World as a whole and is based on a list of regions whose countries lists are published on another part of the website (figure 12-2). The Siemens map presents an intermediate situation between the two previous ones. The net surfer first faces a moving picture of the globe without any division. If he wants to get more information about both the delimitation of regions and their composition, he has to click on the globe which then stops to turn. A region is then highlighted in yellow colour and details about the chosen region appear on the right side of the globe (figure 12-3). This kind of presentation is not specific to some type of firms and it is neither related to their nationality. But it is interesting to note that, apparently, some firms do not want to let one know immediately how they divide the World on a pictorial medium. Maybe it is a well-thought-out decision of a firm that does not consider that showing divisions of the World is “politically correct”. It can also be a spontaneous representation that could reveal that the firms have a hegemonic

19 Different subset with null intersection and complete coverage of the World

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vision of the World. The Cadbury-Schweppes map, for example, could mean that wherever you are in the World, maybe excepted in Siberia or Sahara, you can find Cadbury products… There is therefore no more division of the World for Cadbury, as it is united by the worldwide consumption of their products. Indeed, from a market’s point of view, a division of the World by a firm could be based on the following criteria: countries were our products are available, countries where they are not… Harmonisation maps collection The raw material used to achieve this study has been the maps published on the global actor’s websites. Some problems have to be underlined concerning maps and divisions of the World collections. The first one, and the main one, is the use of different World divisions on different web pages on a firm’s website. - More than one division of the World proposed in the same website. It is possible that firms, international organisations or other actors do not have a clear vision of the World regions. They can provide websites with different World divisions on different web pages. One example is the ALCATEL French firm. It is a communication firm that claims to be present in 130 countries in the World. In its website, one can find at least three divisions of the World. First, the firm proposes a list of the local branch companies’ websites <http://www.alcatel.com/comps/localsites/>. On this web page, three World regions are proposed: Americas, Asia / Pacific and Europe / Middle East / Africa. Then comes a presentation of the geographical distribution of sales of the firm (in a web page called “About Alcatel”) on the English version website, where five zones are proposed: Western Europe, Other Europe, USA, Asia, rest of the World. <http://www.alcatel.com/apropos/inbrief/index.htm>. Last, a division of the World is proposed in the corporate documentation presenting the repartition of the firm’s employees in the World. This map shows a quite unusual division of the World <http://www.alcatel.com/apropos/Company_Presentation.pdf> where France is included in the same region as Africa, Arabic Peninsula and South Asia, whereas Spain is included in the same region as South and Central America, Southern Europe with Israel and Georgia… (Figure 12-4).When two divisions were proposed and when the choice was to be made between a map and a list, the map was preferred because of its higher symbolic impact, because one is not likely to remember in detail the division of the World from a list. It was the case for ALCATEL. When the conflict was between two maps, and when the two maps were in line with the purpose of a World division in regions, both maps were used. It was the case for the United National Population division. Its cartographic department proposes regions of the World that are different from the regions generally proposed in the reports (Figure 12-5).

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Figure 12-1 : Pernod-Ricard division of the World

Source : http://www.pernod-ricard.com/

Figure 12-2 : Cadbury-Schweppes division of the World

Source : http://www.cadburyschweppes.com/

Figure 12-3 : Siemens division of the World

Source : http://www.siemens.com/

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Figure 12-4 : One of the Alcatel divisions of the World

Figure 12-5 : two different divisions of the World proposed by the United Nations

- Difference between the map and the text. Even when only one division of the World is proposed, it can happen that a map and a list are presented together. And, in some cases, it could happen that there is a difference between the maps showing a division of the World and the list, even if the list is often placed in front of the map. For example, here are two maps provided on the AXA Group website (figure 12-6.) <http://www.axa.com/en/group/World/> quoting the presence of the firm in different countries, illustrated by maps showing the region. The main problem here is that Turkey appears in the list as belonging to Europe. But, on the map, Turkey is included in the Middle East region. We chose

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to follow the text each time the problem will appear. This method seems more reliable because people who make the websites are probably not cartographers.

Figure 12-6 : The presence list version / map version problem (AXA website)

Presence : Austria, Belgium, France, Germany, Ireland, Italy, Luxembourg, Monaco, Portugal, Spain, Switzerland, The Netherlands, Turkey, United Kingdom

Presence : Lebanon, The emirates

The double belonging problem is the same kind of problem. It can happen that a country is shown on two maps showing different World divisions. This is the case for the French firm Peugeot website (Figure 12-7). Turkey appears on a map as belonging to Europe and on another one as belonging to Middle-East Central Asia region. In that case, if a text is available, the only solution is to rely on it. Limit of Stock Market Firms. The main problem raised by choosing firms that are in the stock market index is that those large firms are often not composed by only ONE enterprise but a group of enterprises. As a consequence, it can happen that all the enterprises from one group do not propose the same divisions of the World. Consequently, the divisions provided on the firm’s website do not match that of the branch office. In this study, we focus only on the head firm’s division of the World.

Figure 12-7 : The double belonging (Peugeot website)

?

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Limits from the sample of map collection The problem with NGOs is that many of them have a global action and wish to promote the idea of a united World. Therefore they do not propose any division of the World on their websites20. Another particular problem can be raised concerning the NGOs division of the World. When one makes a synthetic analysis, the visions of the World which are collected have very different origins and they share few common features. The problem is that it is difficult to analyse such a result: NGOs are from different countries and they belong to different sectors of activity. It is most likely that NGOs which deal with HIV epidemic do not have the same vision of the World than those dealing with the animal protection. In the previous analysis, the actors had something in common and they were grouped on this base. For example the firms that have been studied belong to the same country (i.e. we studied British, German and French firms). In the case of the study about country’s division of the World the common point was the origin of the data: all the divisions of the World came from the website of the different Foreign Offices. For all those reasons, the comments of the divisions of the World displayed by the NGOs websites have to be used cautiously.

20 The analysis of global actors which refuse to divide the World would demand a specific analysis.

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Table 12-2 : first step of building the matrix. To which zone belongs a country?

Quest. n°1 Quest. n°2 (…) Afghanistan Asia Wider Asian Area (…) Albania Europe Europe (…) Algeria Africa Mediter Africa (…) Angola Africa Sub Equatorial Africa (…) Argentina South America Latin America (…) Armenia Asia Wider Asian Area (…) Australia Australia Pacific area (…) Austria Europe Europe (…) Azerbaijan Asia Wider Asian Area (…) Bahamas South America Latin America (…) Bahrain Asia Mediter Africa (…) Bangladesh Asia Wider Asian Area (…) Belarus Europe Europe (…) Belgium Europe Europe (…) Belize South America Latin America (…) (…) (…) (…) (…)

Table 12-3 : second step of building the matrix. For each questionnaires a matrix has been built

Afghanistan Albania Algeria (…) Quest. n°1 Asia Europe Africa (…) Afghanistan Asia 1 0 0 (…) Albania Europe 0 1 0 (…) Algeria Africa 0 0 1 (…) Angola Africa 0 0 1 (…) Argentina South America 0 0 0 (…) Armenia Asia 1 0 0 (…) Australia Australia 0 0 0 (…) Austria Europe 0 1 0 (…) Azerbaijan Asia 1 0 0 (…) Bahamas South America 0 0 0 (…) Bahrain Asia 1 0 0 (…) Bangladesh Asia 1 0 0 (…) Belarus Europe 0 1 0 (…) Belgium Europe 0 1 0 (…) Belize South America 0 0 0 (…) (…) (…) (…) (…) (…) (…)

Table 12-4 : third step of building the matrix. Sum of all individual matrixes

Afghanistan Albania Algeria Angola Argentina Armenia (…) Afghanistan 110 0 14 7 6 59 (…) Albania 0 110 9 1 2 19 (…) Algeria 14 9 110 49 3 19 (…) Angola 7 1 49 110 4 5 (…) Argentina 6 2 3 4 110 4 (…) Armenia 59 19 19 5 4 110 (…) (…) (…) (…) (…) (…) (…) (…) (…)

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12.1.4 How we get the results

12.1.4.1 Data modelling

One table and two different matrixes need to be built to make the analysis. In a first step, a simple table has been built that indicates to which region each country belongs in each questionnaire (for the survey of the case study) or in each website (for this Key Question) (table 12-2.). For example, for the questionnaire n°1, Afghanistan belongs to Asia. Then, an elementary matrix is issued from each column of the previous table. For each questionnaire, one matrix is built, checking the common belonging of two countries to the same region (table 12-3.). The box is filled up with a “1” when two countries belong to the same region and a “0” otherwise. For example, in the table 12-3., Armenia and Afghanistan have been included in the same “Asia” region: the box is filled with “1”. The synthetic matrix is the sum of all the elementary matrixes (table 12-4.). The number in a particular box shows how many times two countries have been included in the same zone by the considered sample of actors or by the ESPON seminar participants. For example, Armenia and Afghanistan belong to the same zone for 59 questionnaires obtained from the ESPON community in Luxembourg in May 2005.

12.1.4.2 Methodology for analysis

The aim of the analysis was to propose clusters of countries that were: Always or often included together in the same region and generally associated with the same countries. To build the clusters, we have to chose a similarity index as explained in the Europe in the World project’s first interim report (part C.3: Methodological framework for the analysis of flows and structures). A hierarchical ascendant analysis can then be used in order to build clusters by joining at each step the two most similar elements or clusters. In the final step, all the elements (i.e. countries) are gathered in the same cluster. The problem is that the results depend heavily on the choice of the dissimilarity/similarity index and that many mathematical solutions are available, underlying different conceptual assumption. We wanted to join states which are not only present in the same regions but also excluded from the same ones which means that the synthetic matrix was not sufficient as it focus only on common belonging and do not take into common excluding. Consequently, the solution was to use a correlation index. One well knows coefficient index, Pearson

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index, can be used in similarity computation. It is a measure of the strength of the associations between two variables. This method have been used on all the matrixes that have be built to study the divisions of the World proposed by firms, NGOs, International Organisation or Countries.

12.1.4.3 Maps of Synthesis of the divisions

To choose the number of region to represent on the synthetic maps of the division of the World of firms, International Organisation and NGOs we rely on the hierarchical tree of the hierarchical ascendant analysis and on the related indexes. The following graph (figure 12-8.) presents the hierarchical tree for NGOs. Mathematical criteria suggest that the 1st more significant level of partition is in five clusters. The second one is in four clusters but we did not take it into account as is make less regions that previously while what it is interesting is to find sublevels. So we used the 3rd more significant level of partition that produces a regionalisation in 8 zones.

Figure 12-8 : hierarchical tree for NGOs

One exception has been made for the synthetic maps (12-1 to 12-3) of firms, because here the aim was to make easier the comparison between the different countries of origin of firms. We tried to use the more significant partition that would apply to the three maps and that would allow to observe enough sub levels. We choose not to name ourselves the regions produced by the synthetic analysis of the division of the World by firms, NGOs and International Organisations. Indeed that would induce to use pseudo “neutral” names, i.e. names linked to

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the geography and the traditional division in continents, while we precisely think that the division are not neutral. More, name them would influence the reader by imposing him our point of view on the composition of the regions. That is why all synthetic maps identified the regions anonymously.

12.1.4.4 Map of the limits of regions

This map (12-6.) was obtained by adding the limits proposed by the International Organisations. When an International organisation proposed more than one division of the World (UNDP or World Bank for example), we used only one of them for the building of this map. When large and small divisions where proposed, we used the larger one because the number of zones were closer to the average number of zones proposed by other organisations. For example, The United Nation Refugee Agency proposed large regions and sub regions. Only the large regions have been used to build this map. When zones have been based on other criteria than geographical ones (indebtness, wealth, development), we used only the geographical criteria. 12.1.5 Results

12.1.5.1 Continentalisation

The division of the World proposed by the different actors shows a strong tendency to use the traditional continents figure as a support for the drawing of the regions. This trend can be first noticed in the average number of zones drawn and then in the limits used. Number of regions The average number of zones, identified by the different actors, ranges between 5.6 (for British firms) and 7.2 (for International organisation) (table 12-5). That reminds clearly the traditional number of continents that are generally presented as being 5, but often 6 when two Americas are distinguished (Cf. First Interim Report, ESPON 3.4.1. Europe in the World).

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Table 12-5 : number of regions

British Firms

German Firms

French Firms Countries International

Organisation NGOs

Minimum 3 2 4 6 5 4 Average 5,6 6,9 6,6 6,7 7,2 6,6

Maximum 14 9 9 9 10 11 1st cluster level 3 4 4 X 4 5 2nd cluster level 4 2 5 X 6 4

This is particularly true on the countries’ Foreign Office websites (Map 12-4.). The divisions in regions show a division of the World into 6 to 9 zones. The four European countries included in the analysis, i.e. France, Germany, Italy and United-Kingdom show a division in six parts. Northern America countries (U.S.A. and Canada) propose a division in seven parts. Asiatic countries show a division in 7 (Japan) and 9 parts (China). But Germany and Italy follow strictly the traditional division in continents established in the 20th century. The only difference between them is the limit between North and South America. The small countries of Central America are included in North America according Germany but in South America according Italy. Localisation of limits Additionally, the synthesis of limits proposed by International Organisation (maps 12-5) clearly shows that continental bodies are privileged in the drawing of zones. Stronger limits are located between two continents, in the sea or ocean. That is the case for the limit crossing Atlantic, Indian and Pacific oceans from North to South. But it is also the case for the far less large Mediterranean Sea between Europe and Africa and even for the Red Sea between Africa and Arabic peninsula. Terrestrial limits are always thinner than maritime ones because it is apparently more sensible, from a political point of view, to draw a line dividing lands and people than crossing a neutral aquatic surface. The exceptions are the limits drawn between Russian Federation and the Chinese World, i.e. Mongolia and China, and between North America, on the hand, and Mexico and South America, on the other hand. Those two exceptions will be detailed later.

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Map 12-1 : French firms dividing the World

Map 12-2 : German firms dividing the World

Map 12-3 : British firms dividing the World

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12.1.5.2 Other “Geographical” factors for subdivisions?

As International organisations are more likely to build additional subdivisions, is it possible to find if further geophysical characteristics of a group of countries can contribute to identify them as a sub-level? Observing the maps 12-4 it seems to be the case for the Caribbean and the Melanesian regions. Those regions are defined by the fact that the countries which constitute them are Islands. But, if so, what are the common geographical characters between Kazakhstan and Japan that could justify they are put in the same region? Other factors that could explain the shape of some regions and the position of some limits are the localisation of natural obstacles like deserts and mountains that are very low populated area. Indeed, the Sahara often appear like a limit when global actors identified a North African region and Himalaya too when India and China are placed in two different regions. However it is difficult to know if those natural obstacles seem significant in the drawing of the region because people identified them as such; or if they appear because they had a great role in the cultural differentiation of population located on each side of the obstacle and that this is this cultural difference that is used as a criteria to compose the zones.

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Map 12-4 : Countries dividing the World

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Map 12-5 : International Organisations dividing the World

Map 12-6 : the limits of zones by International Organisation

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Moving composition of “continents” When using the clustering method to produce a synthesis of the regions proposed, one has to notice that the first more significant step produces cluster in 3 to 5 regions; but more often 4 regions. For example, the synthesis of the division of the World from the International Organisation point of view is done in four regions. The two first ones to be identified are two zones that have a coherent shape from on continental point of view. In the pink colour comes first Africa, as a whole, without any distinction between northern Africa countries and sub-Saharan ones. In the green colour, International organisations identify South America countries, including Mexico, Central America and Caribbean countries. Those two regions seem to have such an internal coherence that they are identified in the first step and are no more divided till the end of the analysis. The other regions to be identified are Asia, on the one hand, and the Europe-North America on another hand. These regions will be then facing more divisions. But those fourth first steps seem to underline the use of a continental base to draw the regions, plus another criterion that could be either economical or cultural in the case of the Europe-North America region. The following table (12-6) tries to summarize the composition of the regions that are formed. Even with so few regions, their composition is quite different according to various actors. That shows that the concept of continent is a moving one.

Table 12-6 : composition of regions formed by the most significant partition

More significant partitions

British Firms (3 regions) Europe – Americas – Rest of the World

German Firms Europe – Asia – Africa – Americas

French Firms Europe – Africa & Middle East & Central Asia – Asia – Americas

International Organisations Africa - South America – Asia – Europe and North America

NGOs (5 regions) Americas – Europe – Asia – Sub Saharan Africa – North Africa and Middle East.

Conclusion on continent Following so clearly continental bodies and avoiding drawing terrestrial limits on the one hand, and using more often average number of 5.6 to 7.2 regions shows the will of the different actors studied here to promote the idea that they use all at some degree the continents to draw their regions. That makes the divisions more consensual, more legitimate in the public opinion as it is not based on contestable criteria but on the so-called “real facts” taught by geography. The question is therefore the following one: is it impossible, in a politically correct way, to divide the World in less than 5 zones, or in more than 7 or eight?

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The previous paragraph dedicated to the moving composition of the continents shows that, in fact, geography is not a “hard fact”. The supposed neutral continental division of the World that are proposed are still representations and interpretation of other phenomena which is clearly enlighten by the recurrent aggregation of Europe and Northern America. The following parts will be an attempt to show which criteria are often used in the drawing of World regions.

12.1.5.3 Cultural factors

Among the other criteria, the first that seem to be used in the drawing of World regions are those related to cultural facts. An Arab-Muslim region The economic and more probably the so called “cultural”21 differences are certainly at the origin of the division (map 12-6) between North African Countries and Sub-Saharan ones. The rest of Africa is nearly not divided except for Sudan that is sometimes placed together with sub-Saharan countries, sometimes with North African ones because to the main religion of the country is Islam. The use of the “cultural” factor is particularly striking when one observes the maps that make a synthesis of the World regions proposed by NGOs (Maps 12-7 & 12-8). The most significant partition, when studying the division of the World from NGOs point of view, is a partition in 5 regions. If this number matches the traditional number of the continents, this division in 5 zones is far less neutral that it is in the case of the other actors. In fact, the regions proposed include a “North African – Middle east” region that is mainly based on civilisation criteria, from Huntington’s definition of civilisation, i.e. mainly religion. Neither firms, nor international public organisation dare do so, even in nine regions. Only countries propose a “Muslim region”. Two interpretations can be given to this Muslim region. Either, the NGOs are mainly of western origins and adopt their countries point of view. Or the civilisation aspect is very important for NGOs and they act in different countries with social workers and the population. In consequence, the religion and language of North African and Middle East countries may be an essential parameter to be taken into account, if the action of the NGOs is to work with woman or child concerns. But therefore, there should be more distinctions inside Asia, because Indonesia is the first Muslim country of the World. The religion is

21 This fuzzy term is employed here as the conglomerate of linguistic, sociologic, historical, religious etc.

criteria which are generally difficult to measure and to combine on an objective basis.

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not the only criteria. The linguistic and “ethnic” ones are implicitly used to and we have here an Arab-Muslim region. Concerning the countries, actually only two of them do not propose such a region: Germany and Italy follow a very consensual division of the World that is the division in continents. Among the others, the size of the Arab-Muslim region varies very much: Japan proposes a very small zone concentrated on Persian Gulf that is maybe more related to energetic supplying than to religious criteria. Another remark concerning this region is the place of Turkey. For Asiatic countries (Japan and China), Turkey belongs to the Arabic-Muslim Region. For European countries which draw this zone and North-American ones, Turkey clearly belongs to Europe.

Map 12-7 : NGOs dividing the World in 5 regions

Map 12-8 : NGOs dividing the World in 8 regions

Australia, a part of Asia? The position of Australia is another phenomenon that can be studied in the light of cultural considerations. Australia is sometimes considered as a part of Asia, sometimes as a specific region that is called Oceania. From the continental point of view, Australia is perceived as the fifth continent and its history links it with the Western civilisation. Australia has been populated from Great Britain and it is still part of the Commonwealth. This suggests that Great Britain, European and North American countries considered it as something apart and therefore not to be included in an Asian region. In fact, when observing the maps, one could see that, on the contrary, only British firms, NGOs and Anglophone countries consider it as a part of Asia. Maybe only the English speaking World agrees with

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the claim of Australia to belong to Asia, at least from an economical and functional point of view. Other countries consider it as a part of Oceania, except for China that puts it in the same region as North America (i.e. Canada and United States), in a region that could be defined as a non-European western civilization region. It is related to the way that China produces World map (Figure 12-9). This western presence on the two shores of the Pacific Ocean can be of great strategic importance from a Chinese point of view.

Map 12-9 : example of Chinese World map.

Source: China Radio International <http://www.chinabroadcast.cn/>

Struggle for influence The question of cultural region is raised particularly when observing the spaces that are sometimes included in a region and sometimes in another one. More generally, the map 12-6. allows to notice that when a country or a small group of countries are circled by a limit, those places are zones of conflicts or, at least, zones of political tension. The tension can come from the challenge between different geopolitical entities in their attempts to control this space, either politically or economically speaking. That is the case for example for the countries of Central Asia, where Russian Federation tries to keep its historical dominant position, but where other political actors try to play an important role because of their strategic position in an oil supplying perspective. European Union and U.S.A. try to control the region, but also other new coming regional actors such as India and China, for which those countries are of great importance. Moreover, those countries are mainly Muslim ones that make them closer, from a cultural point of view to Iran Republic and Turkey. However the stronger limit is in the south of the Central Asian countries.

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That may means that the influence of the Russian Federation is still perceived as the most important one in the region. More, only China draws a specific Russian region that includes Ukraine, Belarus, Caucasian countries and Central Asian countries. Maybe from political and strategic point of view, China prefers to have the former Soviet Empire to its side, unless it is one more time something like a civilization point of view. The other countries that are rather isolated between two (or more) different political and economical influences are Turkey, Greenland and the three small Caucasian countries. Turkey is isolated between two large limits, between its claiming to be a part of the European Union, its historical links with it and its cultural origins that are Central Asian and Muslim ones, even if Mustapha Kemal tried to make people forget their cultural belonging and to make them feel European. Greenland is split between its institutional belonging to Denmark and its cultural and geographical proximity to North America and more precisely Canada. Georgia and even more Armenia and Azerbaijan (which was formerly a Persian province), are divided between their former belonging to Soviet Union and their cultural belonging to Central Asian Muslim region. The synthetic maps of regions show therefore that they are sometimes included into Asia, sometimes into Europe, at least in the periphery of Europe. One other strong hesitation is that between North America, on the one hand, and Mexico and South America, on the other hand. This limit, from the international organisations’ point of view, can be drawn by taking the level of development and the language and other cultural feature into consideration. No matter the trade agreement between North America and Mexico, Mexico is closer from a cultural point of view to the rest of South America. The hesitation is quite visible on all maps, but it is maybe more based on development facts than on cultural ones.

12.1.5.4 Development Perceptions

Sometime, when exploring a website of an international organisation, one can find other interesting divisions. For example, the discounts allowed for individuals from some specific countries in the purchasing of the data produced by the organisation are mapped. They can be seen as a way to divide the World. It is the case of the World Bank (Maps n°12-9 & 12-12). People or administration of some developing countries can get a 75% discount. Others from more developed countries 35% discount. At last, people from developed countries can’t get any discount. Those divisions are not official ones, but they are effective ones based on some concrete criteria. In consequence it is interesting to integrate them in the study, at least to help interpreting the result of the analysis. Strange divisions of the World are often proposed, mixing geographical criteria and development ones. Industrialised and developed countries are gathered in one

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group without any attention paid to their geographical location. Developing countries or emerging economies are grouped according to their geographical location and the divisions seem to be made according physical criteria (the Pacific) or cultural ones (Arab States). It is particularly obvious for the following map built with the data provided on the World Bank (Map n°12-10) website in a category that is called “geographical areas”. It is strange to observe that developed countries “do not need” to be distinguished according cultural or physical criteria and are not even affected to a specific zone. But this kind of division is also made by the Food & Agricultural Organization which proposes a division of the World mixing the development level and the geography (Map n°12-11). As a consequence, the developed zone is divided into “industrialised developed country” and “transition developed country”, while developing countries are classified according to their geographical location (South America & the Caribbean, South Asia, etc…).

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Map 12-10 : Division of the World according to the World Bank - Geographical discount

Map 12-11 : Division of the World according to the World Bank - Geographical areas

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Map 12-12 : Division of the World according to the Food & Agricultural Organisation – Development, sub-level

12.1.5.5 Europecentric view of the World

Last but not least, it seems that all the actors, even countries, adopt more or less a Europecentric view of the World. This European point of view of the World is clear when considering the maps that make the synthesis of British, German and French firms division of the World (maps 5.3.1. to 5.3.3.). The first observation is that there is a great difference between the division of the World of French firms, on the one hand, and British and German firms, on the other hand. The latter have distinguished Europe from the rest of the World in the first step of the analysis. Concerning French firms, they rather make a distinction between an “old World” (i.e. Eurasia and Africa) and a “new World” (America). It can be noticed too on the International organisation map (5.3.5). For some international organisation many divisions of the World exist. In most cases, there is one upper level division of the World and one lower level. (Maps n°12-12). What is striking is that for the general level, the word “region” is used in the subtitle as if they were objective ones. For the subdivisions, they are presented as “development” sub-levels as if the division were based on economic criteria. However, one can notice that the names of the zones are geographical ones and the cardinal points are used to name them (Western, Southern, Northern and

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Eastern Europe for example). One can also notice the great differences between their sizes. For example, Western Europe counts 7 countries and a very small share of World surface and population. Nineteen countries belong to Eastern Asia sub-region. Some of them are very large (China, India, Kazakhstan, Mongolia and Iran) in term of surface and two of them are the most populated countries of the World: China and India, each one gathering more than 1/6th of the humankind. So what are the justifications for such unequal divisions of the World? Is the European region divided in 4 sub-level of small size because slight differences of economic orientation, development level or cultural facts between the countries are well-known by the people working in the United Nation office? Does that mean that Asia, from Iran to Japan, is not known as well as Europe? Or does it mean that a Europecentric perception of the World dominates in the United Nations Offices?

Map 12-13 : Division of the World according to the United Nation Population Division. Regions, general level & Development, sub-level.

The other point that has to be noticed is the extension of Europe in the NGOs point of view. It includes the Russian Federation and the former Soviet countries of Eastern Europe, Central Asia and Caucasus, and also Turkey and Greenland. But then, one more time, the European region is further divided, showing a Western European perception of the World, with, on the one hand, Western European countries and, on the other hand, European peripheral countries. The only other region to be further divided is the North African & Middle East one. It can be due to a good knowledge of those countries by NGOs, maybe because the programmes implemented in those two spaces are of different kinds.

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Map 12-14 : smallest common denominator of regions

The previous map (12-14.) shows the lowest common denominator of the regions from the countries map collection. Only four regions are identified. In green are the countries always included in Asia, in purple the countries belonging to Africa, in blue European countries and finally in yellow southern America countries. The lighter colours are for the countries that have been isolated (China) or place in another region (Sudan) only one. All regions are contiguous, except the Asiatic one because of China that distinguishes itself in its presentation of World regions. The countries in light cream-colour are those which are at least once included in another region than that it is commonly known to belong to. From a European point of view (half of the eight countries studied are European ones, two are of European origin), this division could evoke first a definition of Europe that is very different / far from Europe. The cream-colour countries could be then those that are in an intermediate position between what those defined by us as European and those defined by an absolute

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otherness. Does it mean that the countries that rule the World have a European centrist perception of the World, even Japan? From a functional point of view, one could identify three peripheral areas and one of the poles of the triad (Europe). However, some countries belonging to the Asiatic zone can be considered as belonging to the triad to, such as Japan and some other south-eastern countries (South Korea, Taiwan...).

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ESPON project 3.4.1.

Europe in the World

Final Report – Vol.3: Case studies

Co-financed by the European Community through the Interreg III ESPON Programme

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ESPON 3.4.1 Europe in the World

Final Report – Vol.3: Case studies

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This report represents the final results of a research project conducted within the framework of the ESPON 2000-2006 programme, partly financed through the INTERREG programme. The partnership behind the ESPON programme consists of the EU Commission and the Member States of the EU25, plus Norway and Switzerland. Each partner is represented in the ESPON Monitoring Committee. This report does not necessarily reflect the opinion of the members of the Monitoring Committee. Information on the ESPON programme and projects can be found on www.espon.lu” The web side provides the possibility to download and examine the most recent document produced by finalised and ongoing ESPON projects. ISBN number: This basic report exists only in an electronic version. Word version: © The ESPON Monitoring Committee and the partners of the projects mentioned. Printing, reproduction or quotation is authorized provided the source is acknowledged and a copy is forwarded to the ESPON Coordination Unit in Luxembourg.

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Participants Scientific coordination This work was coordinated by Claude Grasland (professor at University Paris 7, UMR Géographie-cités) and Clarisse Didelon (Post Ph’D at University Paris 7, UMS RIATE) Core Team RIATE: Bernard Corminboeuf, Marc Guerrien, Nicolas Lambert, Isabelle Salmon IGEAT: Laurent Aujean, Gilles Van Hammes, Pablo Medina, Christian Vandermotten ITPS: Mats Johansson, Daniel Rauhut LADYSS: Pierre Beckouche, Yann Richard UMR Géographie-cités : Nadine Cattan, Christian Grataloup, Guillaume Lesecq, Christine Zanin Experts CRS HAS: Györgyi Barta, László Dancs, Imre Nagy, Alexandra Szigeti, Péter Strömpl TIGRIS - "Alexandru Ioan Cuza" University: Octavian Groza, Daniel Condorachi, Ionel Muntele, Alexandru Rusu, Oana Stoleriu, Georgiana Voicu ETH Zurich: Marco Keiner GRUPO SOGES: Alberto Vanolo ORMES: Mohamed Charef, M’hamed Wahbi

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TABLE OF CONTENTS 1. Survey on the representation of Europe and the World of the ESPON community............................................................................................. 19

1.1 Justification of the case studies and link to key question................... 19 1.2 Scale of the study. Clear indication of the space of study .................. 19 1.3 Hypothesis of the case study ........................................................ 20 1.4 Replicable methodology, problems, questions ................................. 21 1.5 Empirical result of the case study .................................................. 29 1.6 ESPON seminar particiants’ view of Europe ..................................... 31 1.7 ESPON seminar view of the World ................................................. 41 1.8 Limits of the case study ............................................................... 47 1.9 Conclusion ................................................................................. 51

2. The geography of Italian internationalization: relations with Central-Eastern European and South and Eastern Mediterranean countries ............................ 60

2.1 Justification of the case studies and link to key questions ................. 60 2.2 Spaces and scales of the study ..................................................... 60 2.3 Hypothesis, problems, questions ................................................... 61 2.4 Methodology .............................................................................. 63 2.5 Empirical results of the case study................................................. 63 2.6 Conclusion ................................................................................. 71

3. The impact of delocalisation on the position of European regions in value chains ................................................................................................... 74

3.1 The example of textile value chain in three marshallian district.......... 74 3.2 Context of case study .................................................................. 76 3.3 General hypothesis...................................................................... 78 3.4 Replicable methodology, problems, questions ................................. 79 3.5 Empirical result of the case study: Specific reactions of the marshallian districts to globalization ........................................................................ 80

4. Migration Flows and Implications: Case Studies on France, Hungary and Sweden ................................................................................................. 91

4.1 Introduction ............................................................................... 91 4.2 Migration Flows........................................................................... 92 4.3 The Immigrants’ Choice of Settlement ........................................... 96 4.4 Factor Prices and Substitutability: A Simple Model .......................... 96 4.5 The Future Immigration Demand................................................... 99 4.6 Scenarios .................................................................................101 4.7 Concluding Remarks...................................................................104 4.8 References................................................................................105

5. Russia and Europe: the scales and geographies of a complex neighbourhood relation ................................................................................................108

5.1 What is the state of the economic relationship between EU and Russia, at different scales?..............................................................................109

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5.2 A strong barrier effect at the local level: the cooperation for the implementation of cross border projects is under developed......................122 5.3 Policy orientations......................................................................136

6. Hungary – the new border of the European Union.................................140

6.1 Introduction ..............................................................................140 6.2 Social and economic differences after 1990....................................142 6.3 Political, social and economic relations between Romania and Hungary, Serbia and Hungary prior to Hungary’s accession to the EU.......................152 6.4 How does Romania relate to Hungary after its accession to the European Union?...............................................................................................176

7. Romania as Eastern border of the European Union................................189

7.1 Introduction ..............................................................................189 7.2 General Assumptions..................................................................190 7.3 L'entre deux: Romania between West and East ..............................193 7.4 Conclusion ................................................................................214

8. Focus on Switzerland........................................................................216

8.1 Introduction ..............................................................................216 8.2 Development trends of the European union and Switzerland.............217 8.3 The European policy of the Swiss federal council.............................221 8.4 Stages of swiss european policy ...................................................222 8.5 Eu accession .............................................................................230 8.6 Bilateral agreements i between switzerland and the european union of 1999 238 8.7 Blateral agreements ii Switzerland – EU (as of February 2005) .........243

9. Mobilities in Western Mediterranean Sea: the other geographic continuity. 259

9.1 Introduction ..............................................................................259 9.2 Moroccan migrants in Europe and in the World ...............................261 9.3 Migrants: essential contribution to Moroccan economy and society....268 9.4 Laws and migration management in Morocco .................................276 9.5 Conclusion ................................................................................282

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FIGURES Figure 1 : gradation in the belonging to Europe ........................................... 23 Figure 2 : example of a problem of codification ........................................... 23 Figure 3 : dealing with the recovering zones .............................................. 25 Figure 4 : solving the problem of recovering zones. ..................................... 25 Figure 5 : a World map from the preliminary survey (P.S.1.3.1) .................... 26 Figure 6 : a World map from the survey (S.51) ........................................... 26 Figure 7 : criteria grouping....................................................................... 28 Figure 8 : ESPON members’ profile ............................................................ 30 Figure 9 : the size of Europe.................................................................... 32 Figure 10 : first (PLAN FACTORIEL (PLOT) of an MCA on European countries. . 35 Figure 11 : A relation between the visits of a country and the appreciation of its

belonging to Europe?......................................................................... 41 Figure 12 : hierarchical tree of the classification .......................................... 42 Figure 13 : Investments as percentage of GDP in Poland, Czech Republic,

Slovakia, Slovenia, Hungary and Romania, Nuts 2 level, 2000 ................. 67 Figure 14 : Exportations (on the left) and importations (on the right) from the

South and Eastern Mediterranean countries, per region, 2003 ................. 71 Figure 15 : The Relation between the Quantity of Labour and the Price of Labour

...................................................................................................... 97 Figure 16 : Intersections between regional trends and EU enlargement .........102 Figure 17 : Evolution of Russian exports and imports to and from the countries of

the Triad.........................................................................................110 Figure 18 : Evolution of UE 15 exports and imports to and from neighbour

countries. .......................................................................................111 Figure 19 : Evolution of exports and imports (in euros) of EU 25 from 2000 to

2004. .............................................................................................112 Figure 20 : Evolution of Russia’s share in the external trade of some CEE

countries. .......................................................................................113 Figure 21 :FDI inward flows and inward stocks...........................................114 Figure 22 : Rhythm of evolution of external trade of Estonia and Latvia. ........115 Figure 23 : Foreign direct investments in Estonia and Latvia. ......................117 Figure 24 : Evolution of transit traffic in Estonia and Latvia. ........................120 Figure 25 : Annual income in North Western Russia in 2004, Evolution of gross

.....................................................................................................126 Figure 26 : Evolution of regional economic indicators. ................................130 Figure 27 : Competitiveness of European countries .....................................144 Figure 28 : Telephone penetration in transition economies in 1989 and 1997..146 Figure 29 : The evolution of Hungarian-Romanian foreign trade from 1989 to

2004 ..............................................................................................152 Figure 30 : The evolution of Hungarian and Romanian mutual investment from

1998 to 2003...................................................................................154 Figure 31 : The distribution of Hungarian work permits on nationality criteria in

the first half of 2002.........................................................................156 Figure 32 : Distribution by counties of the effective number of work permits

released to foreigners (31 December 1999.) ........................................157 Figure 33 : The evolution of the residence permits’ number according to

citizenship (2002–2004) ...................................................................158 Figure 34 : The number of Romanian visitors in Hungary according to their travel

destinations ....................................................................................160

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Figure 35 : The distribution of several-days visitors from Romania to Hungary according to touristic regions .............................................................161

Figure 36 : The nature of relations between the inhabitants of the settlements across the Hungarian-Romanian border (measured by their frequency) ...164

Figure 37 : The situation of the Yugoslav enterprises in the counties of South Great Hungarian Plain (Dél-Alföld) 1996–1999 .....................................167

Figure 38 : The evolution of the residence permits’ number according to citizenship (2002–2004) ...................................................................168

Figure 39 : Number (thousands) of the arriving tourists from the neighbouring states.............................................................................................174

Figure 40 : The territorial organization scheme in Central-east Europe...........207 Figure 41 : Comparison between Switzerland, the EU – 15 and new EU members:

average annual growth rate 1994-2000 (in %).....................................255 Figure 42 : Swiss Imports and Exports 2002..............................................255 Figure 43 : Swiss direct investments in the EU-15 in CHF bn. .......................256 Figure 44 : Swiss direct investments from the EU-15 in Switzerland in CHF bn.

.....................................................................................................256 Figure 45 : Permanent foreign resident population in Switzerland; proportion (in

%) by nationality at the end of December 2002 ...................................256 Figure 46 : monetary transfers from Moroccan abroad (millions of dirhams) ...269 Figure 47 : Monthly travellers between France and Morocco between 1990 and

1995. .............................................................................................275

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MAPS Map 1 : Countries placed in/out Europe and those that are placed sometime

in/sometime out or that are divided..................................................... 33 Map 2 : Frequency of inclusion of a country (as a whole) in Europe ................ 34 Map 3 : Typology of European margins according to how they are perceived in

the survey ....................................................................................... 37 Map 4 : Number of people who give back a questionnaire who have visited the

country ........................................................................................... 40 Map 5 : The World in four regions ............................................................ 43 Map 6 : The World in eight regions ............................................................ 45 Map 7 : the World in fifteen regions........................................................... 46 Map 8 : limits and links............................................................................ 48 Map 9 : countries divided in two parts........................................................ 50 Map 10 : location of marshallian industrial districts considered in this case study.

...................................................................................................... 76 Map 11 : Regional Neighbourhood immigration to Hungary in 2000................ 92 Map 12 : Regional Neighbourhood immigration to Sweden in 2000................. 94 Map 13 : Gross immigration to France in 2000 ........................................... 95 Map 14 : Gross Domestic Product of Latvian Districts in 2004.......................127 Map 15 : Variation of Gross Domestic Product of Latvian Districts between 1996

and 2004).......................................................................................128 Map 16 : Unemployment Rate of Estonia’s counties in 2004 .........................131 Map 17 : Variation of unemployment rate of Estonia’s counties from 1997 to

2004 ..............................................................................................131 Map 18 : Gross Domestic Product of Latvian Districts from 2000 to 2004 (annual

average).........................................................................................132 Map 19 : External Trade of Estonia’s Counties in 1993.................................132 Map 20 : Gross Domestic Product of Estonia’s Regions in 2003.....................133 Map 21 : Roads and Railroads in Baltic States ............................................135 Map 22 : Studied countries......................................................................140 Map 23 : GDP per capita in European countries ..........................................143 Map 24 : Regional differences in the GDP per capita of the three countries.....143 Map 25 : Yugoslav enterprises in the settlements of the Southern Great Plains

.....................................................................................................166 Map 26 : European transport corridors and the concession made to Romania:

how the IV European corridor intersects Romania .................................186 Map 27 : The IV corridor at present: motorway with „political detour” in Banat

.....................................................................................................187 Map 28 : Bechtel / Transylvania highway..................................................187 Map 29 : The Romanian territory between 1850 and 1900 ...........................194 Map 30 : Romania as cultural interface .....................................................195 Map 31 : Romania in the core of the Euro-Asian peripheries.........................196 Map 32 : The western tropism of the post-communist Romania ....................197 Map 33 : The search of an international affirmation and national security.......200 Map 34 : Migrations and welfare gradient in Central-east Europe ..................203 Map 35 : The West-East diffusion of the demographic transition in Romania ...205 Map 36 : Spatial diffusion of the automobile in postcommunist Romania ........205 Map 37 : The origin of the FDI in Romania.................................................210 Map 38 : Distribution by county of the FDI stock ........................................211 Map 39 : Spatial patterns of the Romanian external trade............................213

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Map 40 : Trans-Alpine movements of Goods: Transit Routes ........................257 Map 41 : Number of Moroccan citizens listed in consular services, by region, in

2004. .............................................................................................262 Map 42 : Variation of the number of Moroccan citizen listed in consular services,

by countries, between 2002 and 2004.................................................263 Map 43 : Number of Moroccan citizens listed in consular services in 2004. .....266 Map 44 : variation of the number of Moroccan citizen listed in consular services,

by country, between 2002 and 2004...................................................267 Map 45 : transfer of funds from the Moroccan abroad to Morocco between 1990

and 1994. .......................................................................................270 Map 46 : transfer of funds from the Moroccan abroad to Morocco betwen 1999

and 2003. .......................................................................................271 Map 47 : Evolution of transfer of funds from the Moroccan residents abroad to

Morocco between 1990 and 2003 .......................................................271

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TABLES Table 1 : example of codification............................................................... 24 Table 2 : Frequency of use of criteria ........................................................ 28 Table 3 : Oppositions in the first axis ........................................................ 30 Table 4 : Oppositions in the second axis.................................................... 30 Table 5 : number of countries included in Europe ....................................... 32 Table 6 : Size of Europe and Physical geography criterion ............................. 36 Table 7 : Ukraine and Turkey in Europe..................................................... 38 Table 8 : Correlation Indexes................................................................... 50 Table 9 : Number of inter-firm shareholdings in Central-Eastern Europe by

geographical area and economic sector ................................................ 66 Table 10 : Number of inter-firm shareholdings in Southern and Eastern

Mediterranean Countries by geographical area and economic sector ......... 70 Table 11 : Scale of the regional case studies around 2002 ........................... 75 Table 12 : Textiles output and employment in Belgium, Denmark and Italy,

1984-1999....................................................................................... 78 Table 13 : Economic performances of some regions including industrial districts,

1995-2002 (National level is between brackets) .................................... 80 Table 14 : Evolution of the industrial structure, from 1958 to 2002 .............. 82 Table 15 : Evolution of the employment in Prato, compared to Toscana and

Italy, 1981-2001............................................................................... 85 Table 16 : Evolution and structure of the employment by section in Prato

province, 2001. ................................................................................ 86 Table 17 : Average annual growth of the employment of the Herning-Ikast

district, in regard to its regional and national environment, 1984-2004..... 89 Table 18 : Evolution of the employment by sector in the Herning-Ikast district,

1994-2004....................................................................................... 89 Table 19 : GDP/capita (Hungary = 100%) ................................................142 Table 20 : Employment rate, 2001 ..........................................................144 Table 21 : Unemployment level in 2001 ...................................................144 Table 22 : GDP and employment by major economic sectors, 1995 and 2001 146 Table 23 : The current situation (2001) and occurring changes in the

infrastructural supply (%) from 1995 to 2001 ......................................147 Table 24 : Infant mortality in 2000..........................................................148 Table 25 : Life expectancy at birth in 2000 ...............................................149 Table 26 : Foreign direct investment (net inflows recorded in the balance of

payments) ......................................................................................149 Table 27 : :External debt in 2003............................................................150 Table 28 : Transition indicator scores, 2004..............................................151 Table 29 : The number of foreign students coming to Hungary from the

neighbouring countries .....................................................................159 Table 30 : Comparison of some economic indicators of Voivodina and Serbia.165 Table 31 : The evolution of the bilateral trade 2001–2002 ..........................171 Table 32 : The number of the foreign students arriving from the neighbouring

countries in every faculties (persons)..................................................173 Table 33 : Distribution of FDI in Romania (1990-2004 stock)by economic

development region..........................................................................207 Table 34 : Romania: geographical origin of the FDI (1990-2005 stock) .........209 Table 35 : Foreign trade ........................................................................257 Table 36 : Direct Investment ..................................................................257

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Table 37 : Manpower in Swiss Firms Abroad .............................................257 Table 38 : Commercial Exchange with the EU according to product categories

2001 ..............................................................................................258 Table 39 : Foreigners in Switzerland (12/2002) .........................................258 Table 40 : Swiss Citizens Aboard ( June 2002) ..........................................258 Table 41 : Growth of GNP in % ...............................................................258 Table 42 : Rate of Unemployment in % of Wage-Earners ............................258 Table 43 : ratified conventions by Mediterranean countries .........................281

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INTRODUCTION TO CASE STUDIES This third volume of the final report is especially dedicated to the extensive presentation of 9 case studies. All of them are already shortly presented inside boxes, in order to complete and to make more concrete the synthetic presentations of the first volume. Almost all the case studies presented below were already provided by the second volume of the Second Interim Report but most of them had not reached the final stage of their elaboration. Henceforth, the value added of the third volume lies in the possibility to read the entire texts of each case study, on the one hand, and to enjoy an impressive set of graphs, tables and maps which can not be introduced in the first one. All these case studies are directly connected to the themes developed in the four key questions. They shall provide the readers of the report with more precise information. In some cases, they shall also give them the opportunity to raise questions and to develop analyses which were not necessarily highlighted in the first volume. The following case studies can be distributed in several groups according to the key question they are connected with. The more comprehensive one is a study of the representations of Europe and the World (page 19) which prevail among the experts of the ESPON program, who constitute the so-called ESPON community. This study was set up by the Team RIATE during the Luxembourg ESPON seminar in May 2005 and during meetings of several TPG groups, which were held since 2004. Others are explicitly dedicated to the way that ESPON is embedded in the globalization. They point at the consequences of this process as an efficient factor of differentiations inside the ESPON territory, through three examples. Two of them have an explicit economic content. One aims to show the place and role of Italian firms in the globalization process and the consequences of this process

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on the organization of the Italian economic space (page 60). What is the geographical orientation of the Italian firms? Which Italian regions take advantage from the internationalisation process? The second one aims to show the consequences of the growing openness of the European economy on the recent performances of three marshallian districts (page 74). The last one is indirectly connected to the economic issue and is more focused on demography (page 91). It aims at distinguishing various immigration patterns in several ESPON countries. It addresses the role of international migrations as a response to the growing problem of labour shortage in a rapidly ageing Europe. Five other case studies are connected to the “neighbourhood” key question, and they follow a multiscalar method. They address, more or less explicitly, the relations of EU with various neighbour countries such as Russia, Belarus, former Yugoslavia, Morocco, Switzerland, and so on. In a more detailed way, they also point at the evolution of relations between those neighbours with certain EU members and eventually with regions of these EU members. Consequently, they give clues to understand the impact of the neighbourhood’s evolutions on the ESPON territory at different levels through various issues such as trade, investments and migration flows, remittance flows, cross border cooperation, political relations, etc. What are the main outcomes of these in-depth studies?

1. Some indicators show that the neighbourhood is more and more closely connected to the European space. Some others show that neighbour countries and regions more and more look like ESPON ones. Such conclusions should lead each European citizen to re-evaluate the relevance of the continental definition of Europe, characterized by would-be “once-for-all-defined” limits (Mediterranean, Urals, etc.). To this respect, the ESPON community is in the mainstream, showing opinions perfectly in line with the prevailing representation of Europe, as a closed and strictly limited continent. One can wonder what would happen if the outside (that is the neighbourhood) were more often taken into account for the conception and implementation of the European regional policy.

2. They all empirically confirm that ESPON and EU are not isolated or closed entities. They are totally embedded in the globalization. They not only play a role in the organization and the dynamics of the global space at various levels. They are opened to the outside: the spatial differentiations of their territory are partly conditioned by what happens outside.

3. There are conspicuous interactions between internal ESPON’s and outside evolutions. Such interactions do not follow the same evolutions and do not necessarily have the same consequences at the macro-level (neighbourhood and EU relations), the meso-level (neighbour country and

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ESPON member state relations) and the micro-level (neighbour regions and member states’ regions relations).

4. There is an impressive variety of responses of ESPON’s regions and states to outside evolutions and global processes. It is then hard to foresee their consequences and to use such evolutions and processes as means for the spatial planning and the local development in the ESPON states. The case of migrations flows is particularly relevant. It perfectly demonstrates that these flows can not be easily used to compensate labour shortage and worrying demographic trends in rural and peripheral parts of Europe.

We hope that these case studies will provide not only the readers of this report but also the partners of other ESPON projects with valuable inputs, especially the projects 3.2 (Scenarios) and 3.3 (Lisbon Strategy). We also hope that the main outcomes of this third volume will be eventually used by the members of the ESPON Monitoring Committee, independently from the results of the ESPON project “Europe in the World, The World in Europe”.

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Partie A

ESPON Survey on Europe and the World

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1. SURVEY ON THE REPRESENTATION OF EUROPE AND THE WORLD OF THE

ESPON COMMUNITY

Clarisse Didelon UMS RIATE

Come, here’s the map: shall we divide our right According to our threefold order ta’en? W. Shakespeare, Henri IV, Act 3, Scene1

1.1 Justification of the case studies and link to key question This case study is integrated to the Key Question “Delimitation of World Regions”. One of the aims of the “Europe in the World” project is to propose an efficient World division in regions. This regionalisation of the World is supposed to serve as a support to the European International policy, especially in the development of aid flows matters and neighbourhood policy. Therefore, it is interesting to determine which delimitation of World regions researchers, administrators and policy makers of the ESPON program have in their minds, in order to evaluate to which degree the delimitation that will be proposed by the project is a new one / not obvious one, and consequently how difficult it will be to make it accepted by policy makers. This survey aims also to determiner to which degree the mental map of the World of people is determine by their knowledge of different phenomenon like geographic, climatic, economic, historic, political ones. The “Survey on the vision of the World of the ESPON community” was undertaken under the responsibility of UMS RIATE as a complement to the databases produced in the work package W.P.2.6. This work package aimed to gather and analyse official World divisions produced by International Organisations (ONU, UNDP, FAO and OECD), international Non Governmental Organisations (Care, Red Cross…) and private global companies. It comes also as a complement to the provisional system of regionalisation (World Unified Territorial System – WUTS) that intends to support empirical analysis and harmonise maps and statistical tables developed in the project.

1.2 Scale of the study. Clear indication of the space of study The analyses undertaken in this case study are developed at three levels (cf. annex 01: the questionnaire).

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- World level. The main part of the survey was the drawing of the limits of World regions on a World map established with polar projection. Taking the World as a whole the objective is to produce an “average” or “dominant” vision of the World division within the ESPON community. - European level. The second level of analyse is the Europe one. It was asked to the surveyed people to draw the limits of Europe on an “Enlarged Europe” map. - Country level. For specific countries analysis have been made at the national level in order to explain why they are put in Europe or not.

1.3 Hypothesis of the case study 1.3.1. Hypothesis about the drawings - By drawing the limits of Europe or of World regions people reveal things that are not aware of coming from their primary education, their cultural background - They can draw limits that they would not necessary agree if they were asked about it in language form - Some limits, some parts of the World will be clearly identified other not. They represent either strong realities as considering Africa as a whole, the Mediterranean Sea as a limit… Others are blurred realities as the position of central Asia. 1.3.2. Hypothesis about the relation between individual attributes and drawing The survey aims to determine what the dominant representations of the limits of Europe and of the regions of the World in the ESPON community are. More are they relations between those limits and regions and the individual attributes (gender, age, nationality, profession) or the criteria that people claimed to use (history, economy…) - Is there a relation between frequency where a country is included in Europe and the number of people declaring to have visited it? The hypothesis could be that when a large number of people have visited a country, this country is better known. This knowledge could modify the previous perception on the proximity level of this country from European ones. - Is their relation between the drawing of Europe and the age / nationality / country of birth of the members of the ESPON community? Those questions are

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in relation with the fact people are born in Europe Union, live in an old or recent European Union country. For example: do people from the first six countries of Europe Union have a narrower of broader view of Europe than people from new member states?

1.4 Replicable methodology, problems, questions 1.4.1. Steps of the realisation of the survey The survey has been realised in three stages: - One on the ESPON project 3.4.1 members during the kick off meeting of the project in January 2005 in Paris (14 answers) - One on the ESPON lead partner during the lead partners meeting in Brussels in February 2005 (21 answers) - The last one during the ESPON seminar in Luxemburg in May 2005 (88 answers) Unluckily all 123 answers can not be used because of some mistakes or some oversights that lead to a usable number of answer equal to: - 117 for the individual attributes - 116 for the limits of Europe - 110 for the World divisions 1.4.2. The question of drawing limits We asked to the ESPON community member to draw limits of Europe and of World regions on two specific maps. Concerning Europe it was the European Neighbourhood Template (cf. First Interim Report of the ESPON project 3.4.1.). Concerning the World it was a circular map with projection on North Pole. This then avoid putting Europe in the centre of the World. More, the map was non-oriented and people can handle it as they want as it was a dish of paper not attached with the rest of the survey. To use a drawing on a map rather than a list of country raise a problem and even more when the name of the countries are not specified. That implicitly implies that people know to name the countries from a map and therefore where they are located. We are not sure that people know the location and the name of the countries in the World map and maybe neither in the Europe map. However we deliberately chose this procedure because it is far more precise in the inclusion of a country in a region. A country can belong to a region as a whole. But the drawer can also split it in two or more parts and affect it to many

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zones. This gives precious indications on transition zones between two World regions. 1.4.3. Building the databases The building of the databases has been a very long process. Many problems have been faced during the building of the database for the Europe map as well as for the World one. 1.4.3.1. Specific problems for the Europe map Concerning the Europe map the codification was rather simple. The answers to the questionnaire are codified as follow: - “1” if the country belongs to Europe in a questionnaire - “0” if the country does not belong to Europe. - “0.5” if the country is cut in two part one of them belonging to Europe. However, many problems have been faced during the codification, as some of people did not following the instructions and imagined creative unexpected solution… First in some of the questionnaires two “European” delimitations have been proposed introducing a gradation in the belonging to Europe (figure 01). The question was more restrictive and it was assumed that the gradation in the intensity of belonging to Europe would be found thanks to the frequency of attribution of a country to Europe or if a country is cut in two parts. It has been then decided to take into account the larger zone as the delimitations of Europe. This problem has been found in 6 questionnaires. Another problem was incoherence between the drawing of Europe and the written explanation in the part reserved for the criteria used to draw the limits. For example, many times the criterion “ESPON space” has been used to justify the drawing of Europe. But sometimes the drawings of the limits include the Balkans countries, i.e. Albania and the countries from the former Yugoslavia which are not actually ESPON members. In that case we used the map and therefore the drawing instead of the justification.

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Figure 1 : gradation in the belonging to Europe

1.4.3.2. Specific problems for the World map For the World each country has been affected to a region according to the answer of each participant. The fact that a country can be cut in two or more part raise therefore a new problem (figure 02): the multiplication of the spatial references. Then, if a country is divided, as much new spatial units as the number of parts are introduced in the table. A number has been attributed to the new country line: the larger zone gets the first number, the smaller one the last one. For example if Iran (figure 02 & table 01) is divided in three part, the larger one being “Central Asia”, the second one “Oil countries”, the smallest one being “India World” the codification will be :

Figure 2 : example of a problem of codification

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Table 1 : example of codification

Country name Zone name

Iran_01 Central Asia

Iran_02 Oil countries

Iran_03 India World

After the first preliminary survey, it has been discovered that it was very difficult to deal with zones recovering each others (figure 03). It was then specified in the instructions of the following surveys that “one place should belong to only one region”. However some people draw zones recovering each other. In order to take them into account in the statistical analysis it was then decided to draw a median line between the intersections points of two recovering zones. This new line is thus considered as the limit of both zones (figure 04) A very problem was raised by the fact that some people from the ESPON community refused to divide the World. As we asked them to divide the World in at least two parts, few of them draw a small zone in the North Pole area and then considered the rest of the World as the second zone. This point of view is very interesting and has to be taken into account in the interpretation of the results. However it was not possible to include them in the statistical analysis because that kind of division was not suitable with the methodology used. It was the same problem for survey proposing an original point of view in the division of the World but whose divisions was covering a too small part of the World. For example one questionnaire (figure 05), shows a World in three parts: 1: “my” vacations space, 2: “my” work space, 3: the rest of the World. Another questionnaire (figure 06), shows a World in two parts: 1: “my” house, 2: the rest of the universe. The inclusion of such original answers in the statistical analysis should have introduced too much bias. They have not included in the study but they will be taken into account in the interpretation of results.

25

Figure 3 : dealing with the recovering zones

Figure 4 : solving the problem of recovering zones

26

Figure 5 : A World map from the preliminary survey

Figure 6 : A World map from the survey

27

The matrixes have been built with the same methodology used than for the study presented in the Key Question 01 on mental map. However additional matrixes have been built: - The divided and forgotten countries matrix This matrix aims to take into account the countries that have been divided between two regions. For each country it establishes the frequency of the division of a country in two, three or four part. More, some countries have been forgotten in the drawing of World regions and put in a so-called “rest of the World” implicit region. This matrix aims also to establish how many times a country has been forgotten. - The links and discontinuities matrix This matrix establishes for each couple of contiguous countries the intensity of the link or of the discontinuities between them. 1.4.3.3. Criteria After the drawing of the limit of Europe a question were asking: “Which criteria did you used for this delimitation?” One hope was that the use of a particular criterion could explain the spatial extension of the drawn Europe or the inclusion of a country or not. Six questionnaires did not indicate which criteria were used in the drawing of Europe and in consequence could not be used in the following analyses. No precise criterion was proposed in this open question and therefore many criteria were quote. In order to make the analysis easier they have been grouped in 8 categories presented in the table 02. The most frequent criterion used is the geophysical / geographical one. This criterion is typically used by people who want to let know that Europe is fact that can be defined by objective factors. However as is as been shown in the First Interim Report of the ESPON project 3.4.1. and in the attempt to define Europe in the Second Interim Report, the physical criterion is in fact subjective one and more, often promote with a political purpose. The culture criteria, more often defined by religion, would join the Huntington point’s of view on civilisations. The “politic” criterion was more often used in order to justify the drawing of the present delimitations of European Union. Last, the History criterion was used to gather countries that have a common past, even if this past is made both of confrontations and war as well as peaceful exchanges. That explains the ambiguity of Russia and Turkey status.

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Table 2 : Frequency of use of criteria

Contiguity 4 Functional 9 Economy 13 Feeling / Personal 18 History 32 Politic 40 Culture 44 Physical / Geo 55

Making groups of criteria raise some difficulties, mainly concerning the interpretation of the criteria listed in the questionnaire as shown is the following figure 07. Religion has always been considered as “Culture”. More, the interpretation of a criterion raises other problems. For example, does “economy” means that people gather countries because they have the same economic profile (homogeneity) or because it exist a strong economic relation between it and Europe or that an economic relation could be of some interest (complementarity)?

Figure 7 : criteria grouping

1.4.4. Methodology to analyse the survey - Statistical univariate and multivariate have been applied to the whole database in order to reveal main trends related to attributes, frequency of belonging to Europe or of a specific area in the World. - Specific tests have been made on specific countries (first bivariate analysis and then maybe a logistic model will be developed). The choice of countries is very sensitive but it is first determined by the frequency at which they have been included in Europe focussing on “in between area”. If the number is too high or to small it will be not possible to make the analysis.

Christian religion Scepticism Humour Rationality Declining nationalism Declined competitiveness Sport fans (less than American) Football Beer, pork meat and wine Individualism Tolerance

CULTURE

ECONOMY

29

1.5 Empirical result of the case study 1.5.1. The Typical Espon seminar member 1.5.1.1. The ESPON “ideal-type” An “ideal type” is a qualitative model constructed out of selected elements of reality which can maybe never be found as such in reality. It involves an accentuation of typical characteristics of a phenomenon. It has been tried here to build an ideal type of the ESPON seminar member. To do so it has been decided to put the stress on the most frequent answer in some categories (for example age categories). The value of the more important frequency could be quite different from one variable to another one because categories are quite different. For example 28 categories have been made to the “country of birth” variable, and 2 only for the gender. That is why it could happen that some statements are contradictory (for the graphs related to each variable see the annex 02). The typical ESPON seminar member is a man, born between 1970 and 1979 (however the average date of birth is 1963) in Germany with actual German nationality. The two other more frequent nationalities are French and Italian and people from the 6 founder countries of European Union represent 46% of the ESPON Members. However about 60% of the participants were not born in the European Union, i.e. in a country that was belonging to European Union at the date of the birth. The Typical ESPON seminar member is a researcher who travels abroad more than once a year but less than once a month. In European Union he has already visited 18 countries mainly Belgium, Italy, France, Luxembourg and Germany. Outside Europe he has visited an average of 4 countries mainly Canada USA, Russia and Turkey. 1.5.1.2. Profiles from a multivariate analysis A multivariate analysis on the individual attribute provides a more precise figure of the ESPON community. The first component (15 % of information) (table 03) underlines an opposition between older researchers not born in Europe and who travel a lot and younger people, born in Europe travelling less often. The second component (11 % of information) (table 04) introduces a differentiation according to the age, the gender and the date of adhesion of the country of residence or birth.

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Figure 8 : ESPON members’ profile

Table 3 : Oppositions in the first axis

Born in the forties Born in the sixties or seventies

Born before the Roma Treaty and outside European Union

Born after the Roma Treaty and inside the European Union

Live in countries which adhesion occurs between 1958 and 1989

Live in one of the six first countries of European Union

Visited a lot of countries in Europe and in the World

Visited few countries in Europe and in the World.

Researcher Other (students)

Travel less than once a year or once a year

Table 4 : Oppositions in the second axis

Born in the forties or fifties Born in seventies

Born before the Roma Treaty Born after the Roma Treaty

Live in countries which adhesion occur from 1958 to 1989

Live in countries which adhesion occur after 1990

Researcher Administrator

Male Female

Live in the country corresponding to its nationality

Do not live in the country corresponding to its nationality

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Those profiles underline some trends that seem significant: - Researchers from the six founder countries are rather young (between 26 and 45 years old) and therefore born in Europe. Some of them are not even researchers yet as it is from their part that the category “other” (that represents mainly PhD or post PhD) can be found. But the younger are the people coming from the very new European countries (adhesion after 1990). They are mainly policy makers and administrators. The researchers coming from countries of the second enlargement (between 1958 and 1989, i.e. United Kingdom, Ireland, Denmark, Greece, Spain and Portugal) are older and therefore not born in European Union. - The number of female is more important in the younger age. That can underline the feminization of the European research. - The residential mobility of young researchers and administrators. That can be due to two different facts. First, the residential mobility of the younger can be due to the opportunity to find a job in another country when there is a lack of opportunity in their countries. As older researchers live in their countries of birth that could mean that they ever work in their country or that they are back after some years abroad. The second solution would underline the existence of a kind of cycle of the research activity with few years aboard and a return to the country. But this mobility of young researchers could be also due to the increasing number of opportunities to work and travel in Europe thank to European exchanges programs or research programs and to the willing to discover other European countries. The cause of the residential mobility of young researcher in Europe is probably a mix of the facts proposed above. - Globally, the punctual mobility, for work or leisure is rather important among the ESPON community. It is true that they have to go to the ESPON seminar twice a year, to LP meeting if they are Lead partners and to transnational project group meetings…

1.6 ESPON seminar particiants’ view of Europe Concerning the delimitation of Europe, a clear definition has not been provided. It could be either the present “European Union” as much as a geographical Europe, historical one, a wish for the political construction of European Union or more an utopia of what should be Europe in a more or less far future. 1.6.1. Description The first surprise has been to discover how large was the Europe drawn by the ESPON seminar participants in Luxembourg. With an average of 37.9 countries, it is far larger than the present European Union. In fact the more frequent numbers

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of countries included in Europe are 37 & 38. That means that about 40% of the questionnaires add 12 or 13 countries to European Union and 61% between 11 and 14 countries. Only one questionnaire draws a Europe with the European Union countries and three have been influenced by the ESPON template and draw a 29 countries Europe.

Figure 9 : the size of Europe

Table 5 : number of countries included in Europe

MIN 25 Median 37,00 Mode 37 & 38

Average 37,97 MAX 55

1.6.1.1. The Map of Europe: countries in, out or cut − “IN” countries are mainly always members of the European Union. The number of countries placed in Europe without being divided is 20 that is less that the number of countries actually being member of the European Union (25). They actually represent what could be called the core of Europe. We can notice that Greece, Ireland, Estonia, Cyprus and Malta have been “forgotten” by at less some participant to the survey. − “OUT” countries are those located on the South of the Sahara desert area and Southern and Eastern countries from the Arabic Peninsula excepted Saudi Arabia which northern part is sometime included in the drawing of Europe. It

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seems that those countries are clearly excluded from the mental maps of Europe of the ESPON community. − Other countries, in light green colour, belong sometime to Europe sometime not or they can be divided in too parts. Eastern and Southern countries could be consider as a transition area, were the probability to be part of Europe have to be more precisely evaluate. Indeed, their situations are quite different from one country to another one. Some of them like Ireland, Greece belong to European Union and are nearly always placed in Europe. Others, like Norway, Switzerland or Balkan countries are very often placed in Europe. And the situation is quite different for other countries: some of them being put in Europe in only one questionnaire.

Map 1 : Countries placed in/out Europe and those that are placed sometime in/sometime out or that are divided

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1.6.1.2. Frequency of integration to Europe Map 2 highlights the situation of countries that were placed sometime in Europe sometime not. A gradation from West to East is very clear showing that when one draws the limit of Europe on a map the proximity with the core of Europe makes it highly probable for a country to be included in Europe. The more impressive example is related to Albania and the countries from the former Yugoslavia. It is very rare when they are excluded from Europe mostly because they are located between the core of Europe, Greece and two candidate countries Bulgaria and Romania. Consequently maybe the drawer does not take time to ask himself if Serbia or Bosnia belong to Europe. If the question would have been posed rather than asking for a drawing it is likely that those countries would have not been so frequently included in Europe or would have been more differentiated (Croatia). The situation of Ukraine, Turkey, Georgia and Armenia is quite different as they have often been divided in two parts, one belonging to Europe, the other not. In consequence could those countries be considered as a first sign of a limit of Europe?

Map 2 : Frequency of inclusion of a country (as a whole) in Europe

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The inclusion of all Russia in Europe is a plunge that few questionnaires dare to take, maybe because the country is too large and because a big part of it is located in what people consider as Asia. Less than 17% of questionnaires placed it fully in Europe. The Mediterranean Sea acts like a frontier between the core of Europe and other countries. There is no gradation like the one that could be observed in the East and the number of questionnaires that include them in Europe is small or very small. 1.6.1.3. In-depth analysis of margin This analysis aims to go further than the simple description of the frequency by defining profile of inclusion of group of countries in Europe. The first component of the multivariate analysis (graph n°02) presents a gradation of the frequency of inclusion of countries in Europe. A group of 19 countries are very often put in Europe. The second component globally makes an opposition between questionnaires that draw a Europe toward the East (Belarus, Serbia, Albania, Ukraine and Moldova) and those making it toward the South and Middle East.

Figure 10 : MCA on European countries.

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The following map (03) presents a classification that allows to stress on two great trends in the inclusion of countries in Europe. First, the frequency of inclusion in Europe. The first group is composed of countries that are often or very often included in Europe (red & orange). The second group is composed of the countries that are not often included in Europe with different intensities (green, light greens) and the last one of Central Asia Countries (blue) that is only once included in Europe. The second trend that can be observed is a regionalisation of countries. The red-orange cluster is clearly the drawing of Europe towards the East whereas green clusters concern Southern Mediterranean Sea countries and Middle East ones. This regionalisation is also visible in the subdivision of the green category as Iraq and Jordan (medium green) are close from Syria, Israel and West-Bank & Gaza in the classification even if the frequency of inclusion in Europe is equivalent to the one of Egypt, Libya and Algeria. The case of Tunisia and Morocco are specific as their smaller size allow people to put them in Europe as a whole without going too much to the south as it is the case for Algeria (that is very often cut). 1.6.2. Explanations 1.6.2.1. Criteria used to draw the limits Europe Among all the criteria presented in table 02 only the “Physical / Geographical” criteria has a significant relation with the variation of the number of countries included in Europe. (Chi Square value is 6.9 and the “α” value is 0.032). The relation is the following one: people using the geographical criteria drawn a medium Europe (37 & 38 countries) and people not using it draw a small Europe (less than 36 countries).

Table 6 : Size of Europe and Physical geography criterion

Do not use Phys / Geo

Use Phys / Geo Total

Large 22,95 34,55 28,45 Medium 34,43 45,45 39,66 Small 42,62 20,00 31,90 Total 100 100 100

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Map 3 : Typology of European margins according to how they are perceived in the survey

An analysis on criteria used could explain their use in relation with the drawing of Europe. - The “Politic” criteria is significant but on the other side of the group significant variable describing the integration of different countries in Europe suggesting that to draw a large Europe the “Politic” criteria is not used. - The physical criteria is used to included in Europe the Eastern countries and the political one by people including Southern Mediterranean countries and middle East that sounds strange according to the fact that the previous interpretation of this criteria as the “European politic construction”.

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- The “feeling” criteria is used by people considering Russian federation, Egypt, Algeria, Libya, Kazakhstan, Turkmenistan and Uzbekistan as being a part of Europe. - Functional and economical criteria are used by people considering Estonia, Albania, Croatia, Iraq and Jordan as being a part of Europe. 1.6.2.2 .Could individual attributes explain the drawing of limits of Europe The individual attributes we gathered are not only used to describe the typical ESPON seminar member, but also to try to find if there is a relation between them and the drawing of Europe i.e. the number of countries included in Europe. Unfortunately, as it was the case previously concerning the criteria used, very few tests have significant result. Only one was very significant, but it is very difficult to interpret: the gender (significance level of 0.011). Men draw a larger Europe than women. The average number of countries included in Europe is 38.7 for men and 36.4 for women. This result seems actually very difficult to explain. 1.6.2.3. Turkey and Ukraine Specific tests have been conducted for two countries that are in an intermediate position, both in the survey and in the geopolitical point of view: Turkey and Ukraine. Turkey is now an official candidate country to be part of the European Union. Ukraine is in a sensitive position between its historical links with Russia Federation and the proximity of the European Union. More, both countries have sometimes been divided in two or more pieces in the survey (table 07).

Table 7 : Ukraine and Turkey in Europe

In Europe Outside Europe Cut

Ukraine 92 15 9

Turkey 25 41 50

Source: Survey ESPON 3.4.1. Europe in the World For both countries two different tests have been made: one using the three modalities (In & Out and Cut) and one other using two modalities (In & Out). For the second one, only 66 questionnaires were taken into account for Turkey and 107 for Ukraine.

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Turkey in Europe Absolutely none of the criteria used has a significant relation with the fact to included Turkey in Europe or not. However significant relations can be found when studying the personal attributes. Once again the gender is significant to explain the inclusion of Turkey (in both In & Out and Cut and In & Out tests). Women significantly put Turkey out of Europe and men in Europe. It is coherent with the test of the size of European Union but still very difficult to explain. The two other variables that have significant relations are the number of countries visited in the World and in Europe. Number of countries visited in the World has significant relation with the inclusion of Turkey in the In & Out and Cut test. But the test is not very significant and quite difficult to explain. People that have visited few countries in the World include Turkey in Europe… or exclude it. And people who travelled a lot in the World cut it in two pieces. Does that mean that people travelling a lot are more conscious of the internal differentiations of Turkey or that they are more likely to have a balanced point of view and not a clear-cut one? The question can be raise also for people who visit Turkey: Are they more likely or not to include it in Europe? The relation is significant for both tests and show that people who have not visited Turkey are over represented among the people that exclude it from Europe and vice-versa. Would that mean that a better knowledge of Turkey lead to include it in Europe? But maybe that people that went to Turkey was previously more well-disposed toward Turkey. Ukraine in Europe Concerning Ukraine, again the same gender variable can significantly explain its belonging to Europe or not and again: women are more likely tempted to exclude it from Europe than men. The new discovery for Ukraine is that some criteria have a significant relation with its inclusion in Europe and that for both tests. The first criterion to be very significant is the “politic” one. People who declare to use this criterion exclude Ukraine from Europe that is quite logical because Ukraine does not politically belong to European Union and remains clearly in the geopolitical influence of Russia from economic point of view (cf. recent gas crisis). The other criterion to be significant is the “geographical” one. People who use the geographical criteria are more likely to include Ukraine in Europe. That seems quite logical too because, the physical criteria that is traditionally used to define the East frontier of Europe is the Ural Mountain one despite the lack of evidence of real physical frontier (c.f. dictionary of concepts).

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1.4.2.4. A travel explanation? A better knowledge about a specific country could lead people to more easily consider it as belonging to Europe or the contrary. So the following question is: is their a relation between the number of people that visit a country and the number of people considering this country belongs to Europe? This map has to be compared with map 2 showing the frequency of inclusion of a country to Europe. There is no a strong tendency showing that more a country is visited more it is included in Europe. For example countries from former Yugoslavia are not very much visited but they are included in Europe in more than 85% of questionnaires. It is the same for countries like Belarus or Moldova. The trends of tourism flows can explain the cases of Egypt and Jordan that are more visited than the number of questionnaires that put them in Europe.

Map 4 : Number of people who give back a questionnaire who have visited the country

The existence of a relation can be easily checked with a simple correlation analysis. For this analysis only the intermediate countries (i.e. countries that are not always or never placed in Europe) are taken into account. The correlation

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index in not high and the relation between the two variables could explain only 20% of the information. That could be a good beginning in the try to explain the fact that a country is included in Europe or not, but the pattern of the correlation plots shows that in fact there is no relation at all. In consequence, the frequency of visit of a country can not be consider as a way to explain the fact that people consider that country belonging or not to Europe. Figure 11 : A relation between the visits of a country and the appreciation of its

belonging to Europe?

1.7 ESPON seminar view of the World Our main objective when doing this survey at the World level was to define if the individual representation of the World regions of ESPON members could allow to identify strong groups of countries always put together in the same region. That would mean those countries are perceived as linked either by flows, similarity or accessibility. But then for which reason are they so perceived and could those countries be seen as a core group of countries that could be used in regionalisation process? One other question was to identify “blurred areas”. By blurred area we mean areas that are put sometime with one group of countries sometime with another group. We should have then to define those areas. Are they transitions areas between two relatively homogeneous or integrated groups of country?

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1.7.1. The significant steps in the division of the World. We asked the ESPON members to draw on a round map the limits of 2 to 15 World regions according to them. The following maps were obtained thanks to a hierarchical ascendant classification1. This part is based on the comment of two more significant steps (cf. figure 08) as it was presented in the key question on the Mental Maps plus the last limit of fifteen zone because it was the maximum number of zones that it was allowed to draw.

Figure 12 : hierarchical tree of the classification

1.7.2. World in four regions The first space to be clearly identified by the ESPON members is a World region formed by Europe plus the English speaking North America. Those two spaces are considered here as only one maybe on cultural criteria: this region look like the Huntington’s Western civilization except the fact that Australia is not included and Europe is larger than Huntington’s one because it includes Eastern Europe, Greece and Turkey that are not included by him. But it is also likely that this zone have been drawn by using wealth and development level criteria as they were often put in the same “north” or “developed” region in some questionnaires. More, this region is isolated and in the first step all the reminding countries belong to the same region “Rest of the World”. This regionalisation reminds the strong tendency to Euro-centrist point of view of the World that is in the Key Question on mental maps of global actors.

1 The methodology is detailed in the Key Study on the Division of the World in this report.

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The second entity to be also clearly revealed is a large South America that includes Mexico and the Caribbean Islands. This region is associated to the continents point of view but it is mainly a cultural one with the extension of the region to Caribbean and Mexico that do not belong to the South American Plate. Mexico and some of the Caribbean belongs to the North American plate and other Caribbean Islands and Central America form a specific plate (See Figure 31 in the ESPON 3.4.1. First Interim Report).

Map 5 : The World in four regions

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Africa is also perceived with an evident continental existence and it is defined in the third step. This regionalisation follows very precisely the tectonic plate shape as Madagascar and Mauritius are nearly always included in this Africa region. At this stage a first significant step is reached in the partition The remaining countries form a very large contiguous region that can be considered as Asia, as it is mainly composed by Asiatic countries plus Russia Federation and Oceania. One should just notice that Turkey and Georgia are rather considered as European countries. Those four parts of the World can be considered as “strong realities”. That means those spaces are the basic entities that are identified firstly by the majority of the ESPON Community and that will be further divided. 1.7.3. A World in eight regions Turkey appears then, with Georgia, as a small transition zone between Europe and Middle East and the rest of Asia. Turkey is then placed in the peripheral of Europe but more to serve as a “buffer zone” vis-à-vis other Middle East countries of the region. That position of Turkey underlines that Turkey has been more often placed in Europe in the questionnaires than in Asia or another region. The next country to be isolated is the Papua New Guinea. Its level of development and the geographical share of an Island with Indonesia make it closer from it and Philippine. But it seems that Papua New Guinea is cultural more similar to Oceania countries and the former dependency toward Australia plays a great role when one put it in the same region as Australia. However the hesitation is strong and that is what it is underlined by this quite isolated position on the World map produced by the ESPON community. It is quite the same situation for Greenland that is divided between its proximity to North America, and mainly Canada, and its institutional belonging to the Denmark sovereignty. The two very small Caucasian countries of Armenia and Azerbaijan are then split between the Russian, Turkish and Persian influence. Finally the Central America and Caribbean split from the rest of South America, maybe because of specific cultural features of more likely to the geographical characteristics. The countries of the Central America peninsula are very small ones and the other are islands that distinguished clearly them from the large and continental countries present on the Southern America Peninsula like Brazil, Argentina and Peru… The last step has no statistical meaning. We decided to stop to study the partition here only because it was asked to the ESPON seminar participant to divide the World in fifteen regions. The previous significant partition would have been in 11 regions that means before the identification of Greenland like a region. However the last step is an interesting one because it may mark that we reach a new stage where once more medium size regions are identified. The remaining Asia region is then divided in two large regions, one that comprise

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China, Japan, both Korea and Mongolia and the other one that comprise all the South Asia Countries (except Pakistan), and the South-eastern Asia Countries.

Map 6 : The World in eight regions

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Map 7 : the World in fifteen regions

Now that we have our fifteen regions some remarks can be done on the

divisions that one could except and that did not appear in the study. One can note than despite the disparities of development Japan is, in those

stages, not separated from China neither North African countries from sub Saharan countries; neither North African countries from the rest of Africa. In both cases the mental map regionalisation is different of what has been proposed in WUTS (Cf. Vol 1) by using expert criteria and statistical analysis of flows and similarities. For Japan, maybe its particularity in term of development vis-à-vis the rest of the region would suggest to put it alone in a region, but its relative proximity with China in cultural term, and from a European point of view, lead to put it in the same region than China. Concerning North Africa, one can note than in fact none region has been identified within Africa. That underlines the fact that Africa is badly known in Europe and that the continental perception is dominant

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to define African countries. It seems that few among us know Africa sufficiently to draw African sub regions even if the differences between African countries and populations are very numerous (see analysis on discontinuities).

To conclude one should notice that very large areas (like Africa our South America) coexist with very small spaces formed by only one country (Greenland, Papua New Guinea), a couple of countries (Turkey and Georgia, Azerbaijan and Armenia) and groups of countries (Europe, Central America and Central Asia). That underlines the existence of well defined regions among the ESPON community and the existence of transition areas for which the knowledge is more hesitant or that are the place of confrontation between two influences or more.

1.8 Limits of the case study The analysis of the questionnaires allows to draw the limits of the regions, according to the number of questionnaires that draw that limit between contiguous countries. Moreover it is possible to draw the links according to the number of time two contiguous countries have been put in the same region. The following map 08 therefore shows the main limits (in blue) and the main links (orange) between two (terrestrial and extended) contiguous countries. 1.8.1. The frontier of Europe

One can observe that the strongest division of the World for the ESPON seminar participants is the one drawn through the Mediterranean Sea between Europe and North African countries. Would that means they feel that European countries are very much different from the North African ones? Could that mean that for the European researchers and policy makers that attend the seminar, the Mediterranean Sea should be considered as the more evident frontier of the World, and consequently the frontier of Europe? The terrestrial western frontier of Russia Federation is also a strong one. It could reveal, from the ESPON members point of view the Eastern frontier of Europe, meaning that for them Belarus, Moldova and Ukraine should be included in Europe. The limit is less strong between Turkey and Ukraine, Greece and the Balkan countries. It is even less strong than the frontier between Turkey and Iraq and Syria. The fact that Turkey is circled by two medium strong limits shows that there are great hesitation in the ESPON community to decide whether Turkey belong to Europe or not. The strength of the limit around Europe and of the links between European countries clearly shows that this map has been drawn by European people. How strong the links between European countries are, comparing with the links with other countries in the World! Even if on the previous synthetic maps it appears that African is not split during the first 15 steps of dividing the World it is not as

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coherent, according to the ESPON community, than Europe is. Europe, from France to Ukraine, and Norway to Malta is the better defined space in the World.

Map 8 : limits and links

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1.8.2. Continentalisation and development The second strongest division of the World is the one between Russia Federation and North America (Alaska). It also crosses a maritime strait and could be a remaining of the Cold War. However those two countries belong to two different continental bodies and in consequence this limits could be just considered as a continental limit. In fact, the mains limits proposed by the ESPON seminar participants are continental ones (even the one between Europe and Africa). That is the case for the limit between the Arabic peninsula and Africa and the South Eastern Asia / Oceania one. In that case the difference of development level that exists between Indonesia and Australia could also explain that limit. The limit between North America and Caribbean and Mexico is less due to continentalisation that the fact that despite the trade agreements, Mexico is not perceived as belonging to North America. The number of thin limits in the Iran, Afghanistan and Pakistan neighbourhood show of it is difficult, from our European point of view to define a coherent space in this region. 1.8.3. Correlations of discontinuities A correlation test has been made in order to understand the meaning of the discontinuities. Is there a relation between the values of the discontinuities and other indicators like economic or social ones? The following table 08 shows that the most significant relation is between the value of the limit and the absolute value of GDP in 1986-90. Then comes nearly all indicators related to the GDP either in absolute or relative terms. The Human Development Index in 2002 is also correlated with the value of discontinuities from the survey, but more than each of its components. Two things can been learned from this short analysis: first, it seems that the inertia of knowledge is such that we evaluate the countries on outdated data. So the limits drawn by the ESPON seminar participant are based on old data or knowledge. Second, we have more a global impression about the level of development of a country, than the knowledge of the different indexes that are used to evaluate this development. That could underline an ability to perceive a average situation of a country despite the fact that the details are not known.

One of the first factors of vulnerability is obviously the size of a country (Russia - China). When a country has a large size is more susceptible to be cut in different part as people have knowledge about the internal spatial differentiations. Thus large countries can belong to different cultural areas or at least their different parts can be under different cultural influences. The development disparities between spaces can also lead to cut a country, but in the case of this survey that never happens: surprisingly nobody makes a distinction between the eastern coast of China and the rest of the country.

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Table 8 : Correlation Indexes

VALDIS Relative differences GDP in 56-60 0,17 Relative differences GDP in 66-70 0,22 Relative differences GDP in 76-80 0,25 Relative differences GDP in 86-90 0,30 Relative differences GDP in 96-2000 0,30 Absolute differences GDP in 56-60 0,05 Absolute differences GDP in 66-70 0,13 Absolute differences GDP in 76-80 0,25 Absolute differences GDP in 86-90 0,41 Absolute differences GDP in 96-2000 0,37 Human development Index in 2002 0,22 Life expectancy Index in 2002 0,17 Education Index in 2002 0,15 GDP Index in 2002 0,20

Map 9 : countries divided in two parts

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The second factor of vulnerability could be attributed to the shape of the country. That is the case for Indonesia and Malaysia, Philippines. When a country is formed by more than one entity it is then likely to be more often cut in different parts, and even more when this country is an archipelago. Indonesia, that is the larger archipelago of the World (17 000 islands) is the second more often divided country in the questionnaires. Malaysia is also often divided even if its superficies is not so important but because it is formed by one peninsula and the northern part of the Borneo Island that are far one from each other. Then a third factor could be the geographical position between two distinct zones that are different from a cultural or economical point of view. That is more precisely the case for Turkey, Ukraine, Mongolia and Mexico. People drawing the limits of the World regions hesitate to attribute them to one space or another one and find a solution in cutting them. One can note that, in addition to the countries named above, the main vulnerable countries in this situation are the countries of Central Asia from Kazakhstan to Pakistan and Iraq.

1.9 Conclusion There are more analyses to do in order to exploit all the information get thanks to this questionnaire. For example, it would be interesting in the next step of the work to compare the size and the composition of Europe in the European map and in the World map of the questionnaires. Analysis of the explanations of World regions by the individual attributes of respondents should also be further developed. However this case study is wealthy in term of knowledge we get about the European researchers and policy makers vision of the World and vision of Europe. The analyses made here have been very helpful to the interpretation of the ones made in the Key Question 1 (Volume 1) on mental maps, because we get here information about the criteria that where used and that where not available on global actors websites. In the final report, the results of this case study will be helpful to, because, as we know what the common representations of Europe and of the World in the ESPON community are, it will be easier to introduce our proposals on World regions. In a psychoanalytic sense, we can consider that further progress in the perception of reality can not be achieved as long that unconscious facts are not put to awareness of actors.

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Annexe 01: the questionnaire

ESPON 3.4.1. « EUROPE IN THE WORLD »

SURVEY REPRESENTATION OF THE WORLD OF THE ESPON COMMYNITY

___________________________________________________________________________

I. INDIVIDUAL ATTRIBUTES Sex: ................................................................... Birth date: ......................................................... Country of Birth: ............................................. Actual Nationality (ies): .............................................................................................................. Former Nationality (ies) if any: ................................................................................................... Actual country of residence: ....................................................................................................... Former countries of residence (more than six months) if any: ................................................... ....................................................................................................................................................... What is your higher degree level ? ............................................................................................... Activity : - Researcher or teacher

- Administrator or policymaker - Other : ..........................................................

Could you precise on which frequency you go abroad for your job or your vacations?

Less then once a year Once a year More than once

a year Once a month More than once a month

Indicate in which following countries you’ve been and add those that are not listed.

Austria Greece Poland Belgium Hungary Portugal Bulgaria Ireland Romania Cyprus Italia Slovakia Czech Rep. Latvia Slovenia Denmark Lithuania Spain Estonia Luxembourg Sweden Finland Malta Switzerland France Netherlands United Kingdom Germany Norway

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II. WHAT IS YOUR DELIMITATION OF EUROPE

A) Draw on the following map a line showing your delimitation of Europe.

B) Which criteria did you used for this delimitation? .........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

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DIVIDE THE WORLD IN 2 TO 15 REGIONS

C) Draw on the following map lines showing your World divisions in 2 to 15 spaces. One place should belong to only one region but a country can be divided between two or more regions. If a country must be divided be sure you know why and explain it below.

D) Name your areas (please remind the number and report it on the map)

Name

E) Which criteria did you used for this delimitation? ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

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ANNEX 02: THE ESPON COMMUNITY MEMBERS

Gender repartition

Nationality of the participants

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Country of birth according to its date in European Union

Date of birth of the participants

57

Frequency of travel abroad

Number of people born in European Union

Activity of the participants

58

Number of participants having visited… in Europe

Number of participants having visited… in the World

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Partie B

ESPON & Globalisation

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2. THE GEOGRAPHY OF ITALIAN INTERNATIONALIZATION: RELATIONS

WITH CENTRAL-EASTERN EUROPEAN AND SOUTH AND EASTERN

MEDITERRANEAN COUNTRIES

Alberto Vanolo Grupo Soges

2.1 Justification of the case studies and link to key questions

The case study refers to Italian economic internationalization – in terms of commercial flows and investments – with reference to Eastern European and South and Eastern Mediterranean countries. Using the classic “centre – periphery” geographical metaphor in order to describe the world economy, Italy is certainly a central country, while Eastern European and South Mediterranean countries belong to the periphery or semi-periphery. However, the situation is certainly not so simple, and plain metaphors such as “centre-periphery”, “North and South”, “developed and developing countries” hinder a number of different roles, positions and problems. This complex panorama is well represented in the case study: not only the situations of Eastern European countries and South and Eastern Mediterranean ones are quite different, showing two different ways of being “peripheral” in the global economic scenario, but also the “central” position of Italy is not free from problems and perils connected to the building up of a new division of labour and the constant fear of a progressive productive delocalization, moving more and more industrial plants to countries characterized by lower labour costs.

2.2 Spaces and scales of the study The analysis refers to Italian flows directed towards Central and Eastern European countries and the South and Eastern Mediterranean rim. The first group refers to Albania, Byelorussia, Bosnia and Herzegovina, Bulgaria, Czech Republic, Croatia, Estonia, ex-Macedonia, Latvia, Lithuania, Moldavia, Poland, Romania, Russia, Serbia and Montenegro, Slovakia, Slovenia, Ukraine and Hungary. South and Eastern Mediterranean countries comprehend Cyprus, Malta, Turkey, Algeria, Libya, Morocco, Tunisia, Egypt, Jordan, Israel, Lebanon, Syria, Palestinian territories. This group refers to the countries signing the EU-Mediterranean partnership, with the sole addiction of Lebanon, with the status of mere observer.

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2.3 Hypothesis, problems, questions It is well known how the current economic scenario is becoming more and more globalized, and every enterprise, regardless its dimension, has to face international competition. This international dimension is emphasized by many interconnected socio-economic phenomena, such as a growing new division of labour (just to cite the famous Hymer’s expression), the rise of transnational corporations, the geographical widening of the strategic horizons of firms, organizations, and economic actors in general. These phenomena are so complex and interconnected that it is difficult to built up an exhaustive and realistic interpretative scheme (or even a simple typology) in order to interpret and analyse economic internationalization. Assuming a quite oversimplified theoretical framework, there are basically two ways a firm can deal with internationalization: exporting goods or services, or becoming international (i.e. a transnational corporation). In this sense, from an analytical point of view, trade and investments statistics (FDIs2) are two important measures (proxies) of economic internationalization. Calling back the classic work of Dunning (1981, 1993) and his OLI paradigm (acronym of Ownership, Localization e Internationalization), there are essentially two reasons why an enterprise choose to become international: the first one deals with the desire to penetrate and “coming near” to a new local market; the second one refers to the search for low-cost inputs. Investments directed towards new output markets for goods and services are usually called horizontal FDIs. These concerns typically the duplication of parts of the productive process by building or acquiring new industrial plants in order to furnish different geographical areas, and in this sense horizontal investments may be considered ideally as a substitute of commercial flows, in that firms replace exportations with local productions (Shatz and Venables, 2000). The advantages connected to this strategic choice refer both to the reduction of some sorts of costs, such as those of transportation or those linked to exportation tariffs, and to the pursue of particular strategic goals, such as the strengthen of the competitive position of one firm in a specific market. Differently, investments driven by the search for low-cost inputs are vertical FDIs: these concern the division of the productive cycle by localizing some functions in geographical areas characterized by low-cost productive factors. This partition is based on the premise that different parts of the production process

2 It is useful to mention that, according to UN (2004), foreign direct investment (FDI) is defined as an investment involving a long-term relationship and reflecting a lasting interest and control by a resident entity in one economy (foreign direct investor or parent enterprise) in an enterprise resident in an economy other than that of the foreign direct investor (FDI enterprise or affiliate enterprise or foreign affiliate). FDI implies that the investor exerts a significant degree of influence on the management of the enterprise resident in the other economy. Such investment involves both the initial transaction between the two entities and all subsequent transactions between them and among foreign affiliates, both incorporated and unincorporated. However, FDI may refer to the building up of a new industrial plant: these are usually called greenfield investments.

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need different inputs. Since the prices of the inputs differ strongly from one country to another, and particularly labour costs, it is convenient to implement a multinational structure: this is a simple interpretative scheme, formerly proposed in the famous product cycle model by Vernon (1966). This is probably the case of many Italian investments directed towards Eastern European countries. The search for low-cost inputs may concern, apart from labour costs, also basic materials, intermediate goods, but also economic advantages of quite different nature, such as a certain facility in bypassing environmental regulations and toxic wastage norms, a phenomenon denounced not only by environmentalists, but also by United Nations and World Trade Organization (UNCTAD, 2004; WTO, 2004). Differently from horizontal FDIs, vertical ones support international commerce, in that imply the movements of intermediate goods between the various places involved in the productive process. This is the reason why about one third of total international trade happens within multinational enterprises, that is between plants localized in different countries, but belonging to the same company structure. The case of horizontal FDIs shows how firms facing the possibility of an international expansion have to choice between producing in the new market (becoming a multinational enterprise) or exporting their own products or services. The opening of a new plant implies a variety of additional costs, for example in terms or bureaucratic or administrative difficulties, or costs connected to foreign legislative of fiscal systems. Some of these costs may be limited by cooperative agreements with other enterprises or by other juridical tools, which represent a sort of “third way” (after trade and multinational structures) in order to deal with internationalization (Grandinetti and Rullani, 1996). Among these, particularly relevant is the case of acquisitions, joint ventures and strategic alliances. In a similar manner, the choice of substituting exportations with the construction of a new plant involves a number of advantages, such as the reduction of transport costs and the bypass of some commercial barriers. Moreover, in the case of some kinds of products, it has not to be underestimated the importance of the closeness to the destination markets, the reduction of supply times and a stronger flexibility in adapting to local needs and specificities of the local demand. Such choice, however, is also conditioned by the typology of production: in the case of massive economies to scale, for example, it is preferable to have a singular, huge, production plant, and therefore to choose the exportation option (for an exhaustive discussion concerning these topics, see Helpman e Krugman, 1985). And, of course, also non-economic factors play an important role: consider for example the cumulative aspect of investments: investors facing the uncertainties and the risks of the global market tend to observe and imitate well-known successful stories, causing the cumulative

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growth of investments directed towards a few areas that have gained a certain reputation in the international scenario.

2.4 Methodology The internationalization phenomenon has been estimated with simple data concerning trade and investment flows. Such data have been provided, at national level, by Unctad (2004) and Wto (2004). However, some integrations and focus have been proposed by referring to specific Italian sources, particularly the Istituto Nazionale per il Commercio Estero (Ice, 2004) and Mariotti and Mutinelli (2004). Even if any exhaustive analysis of internationalization certainly requires deeper qualitative and quantitative investigations, these data provide useful information concerning the role and magnitude of economic integration between Italy and the considered geographical areas. In the case of investments, only active internationalization has been considered, i.e. Italian investments directed towards the considered areas, since inward investments from these areas are almost absent. Differently, in the case of commerce, flows have been considered in both directions, since economic integration and international division of labour originates flows of finished or semi-finished goods both inward and outward.

2.5 Empirical results of the case study General features of Italian internationalization Concerning the involvement in international trade, in the years from 1995 to 2003 (with the sole exception of 1997), the number of exporting firms has grown. However, in the last years, the growing price of euro vis-à-vis other currencies has reduced this positive trend, above all in terms of the total value of the exportations. However, the widening of commercial internationalization is evident also from the geographical point of view, as shown by figures relative to the average number of foreign markets served by Italian exporters: 4,8 in 1995, and more than 5,4 in 2003. Such commercial openness is strongly based on the contribution of small and medium sized enterprises, the backbone of Italian industrial system: 90% of the exporters refers to enterprises employing less than 50 workers, contributing for 30% of the total value of Italian exportations; big enterprises’ (more than 250 workers) contribution is 42%. However, considering the degree of commercial internationalization as the share of exporting firms on the total firms (for example in terms of the number of employees), this value tends to become higher with bigger enterprises.

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Considering the geographical destinations, European Union is the most important market for small, medium and – above all – big enterprises. Outside the EU, Eastern European and South and Eastern Mediterranean Countries represent the most important destinations for enterprises employing less than 50 workers, while big ones tend to export more to North America. In the field of internationalization through multinational structures – i.e. through FDIs – the aperture of the country has strongly grown during the 90s: if in 1995 the value of foreign investments as percentage of GDP was 8,8%, in 2002 such figure had almost doubled. However, compared to other OECD countries, Italy is still quite poor in terms of internationalization of production: in the same period, for example, French shares grown from 13,2% to 45,8%, while in Germany from 10,5% to 29% (UNCTAD, 2004). These Italian low performances may be partly explained by the well known accent on small and medium sized enterprises: the multinational choice implies the use of financial, informative and managerial resources not so easily available for small enterprises. However, it has to be noticed that other countries characterized by similar industrial structures show a stronger productive internationalization: this is the case, for example, of Spain (from 6,2% in 1995 to 33% in 2002) and Portugal (from 3% to 26,2%). In 2003, Italian outgoing FDIs involved 14.104 foreign enterprises (2,1% more than 2002). From the geographical point of view, the most important destination is European Union (39,5%), and particularly France (1.426 firms), Germany (1.088) and UK (1.029). North America plays an important role with 11,4% (1.414 are located in USA). The concentration of the investments in few countries seems to confirm the importance of imitative and cumulative processes involving investors. Concerning the differentiations of the Italian space, firms located in Central and Northern Italy provide 96% of total foreign participation. This is partly due to the lack of seats of multinational enterprises in Southern Italy; the most active regions are Piedmont, Lombardy, Emilia Romagna and Lazio. Among the Southern regions, Puglia and Sardinia are showing quite positive trends, in the first case due to the geographical proximity to Balkans, in the second one mainly because of the expansion of the ICTs sector. However, productive internationalization may concern also incoming foreign investments. Compared to other European countries, this aspect of internationalization is extremely poor: the contribution of foreign-owned enterprises (almost 6.000 in 2003) in terms of employment has been 7% in 2001, while the analogous figure in France in 1999 has been 14%. The panorama of foreign participated firms is dominated by big size enterprises: those employing more than 500 workers involve more than half of the employment of this typology of firms. These firms comes above all from other countries of the European Union (60% of the enterprises, 56% of the employees), followed by North America (almost one third of the employees in the case of USA). Within European Union, France and Germany are by far the most important investors.

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Such firms locates almost exclusively in Central and Northern Italy (95%), and particularly in Piedmont, Lombardy and Lazio, confirming the importance of major urban centres in the attraction of investments and, more generally, global flows. Internationalization towards Central and Eastern Europe

Central and Eastern Europe represents an important destination for Italian investors: data concerning 2004 shows the participation in 2.725 firms. In the same year, Italian participation in Western Europe (EU-15) has involved 5.921 firms, in North America 1.727, and in Asia 1.721. In terms o employees, shareholding in Central and Eastern Europe concerns 228.329 workers (20,6%). Investments towards this area are even more impressive considering that, before the 90s (i.e. before the collapse of the Berlin wall), they were almost absent: in 1986 they represented 0,6% of Italian investments, in 1996 reached 20,8%, and in 2004 surpassed 27%. Table 1 present some data concerning investments (shareholdings) in 2003. Basically, most of the investments comes from Northern Italy (Lombardy accounts for almost 37%, followed by Veneto and Emilia Romagna) and refers to manufacture. Particularly, in the last years, the typical made in Italy sectors increased their incidence, as testified by the importance of the clothes, leather and textile sectors. Important firms like Benetton, Max Mara and Tollengo, for example, invested heavily in Hungary and Poland in recent years. It has to be noticed that the scarce presence of investments in high-tech sectors is a general problem of Italian investments, not only in Central and Eastern Europe. Concerning destinations, Romania, Russia and Poland are by far the most relevant markets, followed by Hungary, Czech Republic and Bulgaria. It has to be noticed, from the geographical point of view, that many empirical analysis (such as that of Rey and Molinari, forthcoming) has emphasized that such investments are strongly polarized by a few metropolitan areas, basically the capital regions, while the vast majority of the areas are basically excluded from the phenomenon (Figure 1).

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Table 9 : Number of inter-firm shareholdings in Central-Eastern Europe by geographical area and economic sector

Number of participated foreign firms

Economic sector North-Western Italy

North-Eastern Italy

Central Italy

Southern Italy

Sicily and Sardinia Total

Extractions 1 1 5 0 0 7

Manufacture 609 563 184 68 5 1.429

Food, beverage and tobacco 35 77 20 2 0 134Clothes, leather, textile 193 209 79 33 1 515

Wood and furniture 27 91 27 13 0 158Paper and publishing 32 9 9 1 0 51 Oil derived and fuel 1 0 2 1 0 4

Chemical 42 13 4 1 0 60 Rubber and plastic 28 23 7 1 1 60

Materials for constructions, glass, ceramics 31 28 6 7 0 72

Metal 88 54 11 5 2 160Machinery 50 30 7 2 0 89

Electric machinery 42 24 12 2 1 81 Equipments for transports 40 5 0 0 0 45

Energy, gas, water 17 6 3 1 0 27 Constructions 31 33 24 16 1 105

Commerce 315 210 154 14 5 698Logistic and transport 27 54 33 5 0 119

Information and communication 11 10 14 0 5 40

Other services 76 33 8 0 1 118

Total 1.087 910 425 104 17 2.5

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Employment Turnover (millions euro)

133.335 8.923

45.600

3.282

30.014

4.913

11.206

305

1.174

77

221.329 17.500

Source: http://www.ice.gov (on May, 2005)

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Figure 13 : Investments as percentage of GDP in Poland, Czech Republic, Slovakia, Slovenia, Hungary and Romania, Nuts 2 level, 2000

Note: Figures refers to total inward investments (not just from Italy) Source: The Vienna Institute for International Economic Studies

At the same time, trade between Italy and Central-Eastern European countries has grown in recent years. This is probably due to phenomena of industrial relocalization by Italian firms; it is a fact that more than 10% of total Italian importations and exportations is centred on this area. Such growing phenomena is particularly focused on Italian exportations: during 2003, for example, exportations’ growth has been 5,7%, while importations’ 3,7%, producing a commercial credit balance, with respect to this area, of 2 billions euros. Italy is one of the most important European suppliers of the area – the second European country concerning the increase in the incidence of Italian products in this area during the period 1999-2003 (the first has been Spain). The eight EU countries of this area involve 6% of total Italian exportations, and such figure is showing positive dynamics. The most important country in terms of importations is Poland. However, particularly important is the position of Romania: in the last ten year its weight in terms of Italian exportations is basically doubled, and in

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2003 the country has surpassed Russia, becoming the second most important importer of the area. Similarly, Czech Republic is becoming a more and more relevant commercial partner: during 2003, Italian exportation rose by 16,2%. Considering the typology of products, Italian exportations concerns above all machinery, (5.947 millions of euro), followed by textile (2.692), leather (2.454), electric and optical machineries (2.416). Differently, importations refers above all to minerals and fuels (7.395 millions of euro), metals (3.643), motor vehicles (2.166) and leather products (2.103). On the side of Italian importations, from a geographical point of view, the most important commercial supplier is Russia, providing more than 30% of total flows. Such trend is strongly growing (4,2% in 2003) – with the sole exception of year 2002. Internationalization towards South and Eastern Mediterranean countries Despite the growing importance of inward investments in most geographical regions, the South and Eastern Mediterranean area is basically characterized by scarce performances, both at world level and in the framework of developing countries (Salabé, 2001). While world inward FDIs between 1991 and 2000 growth from 159 to 1.271 billion dollars, in South and Eastern Mediterranean countries the increase has been much lower, passing from 2,3 to 9,8 billions. Moreover, considering such data in a different perspective, the weight of the area at global level has decreased from 1,4% to 0,8% of world inward flows. It is a common discussion whether the construction of a free trade area between European Union and South and Eastern Mediterranean Countries, by enlarging the local market, will support an expansion of the investments directed toward this area. In facts, one of the most important aspects of the Euro-Mediterranean Partnership proposed in Barcelona in 1995 concerns the promotion of economic integration until 2010, both by encouraging cooperation and by removing normative (for example legal and fiscal) “brakes” for the free movement of financial and commercial flows. However, considering the progressive integration of the European Union in Central and Eastern European markets, the future for South and Eastern Mediterranean Countries probably deserves both opportunities and risks. Consider, for example, that one of the most evident reasons to invest in the Mediterranean area is certainly connected to the low labour costs. It has to be noticed that such “low” labour costs, however, is higher than in Central and Eastern European countries, not to mention Asian ones. Considering, in addiction to all this, the growing economic integration between Eastern and Western Europe, together with the political instability and scarce infrastructural endowment of the South and Eastern Mediterranean rim, the general framework behind this low attractiveness becomes more and more clear. Data concerning Italy confirm these world trends. In 2003, the weight of Italian investments directed towards this area is a mere 1,9%. Moreover, Italian

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investments are polarized by a few countries: Turkey and Lebanon get 63% of Italian investments, and the figure surpass 70% including Tunisia. A strong polarization is evident also considering the regions of origin of the investments. Considering the number of foreign firms with an Italian participation in 2004, 718 out of 932 enterprises concerns North-Western Italian regions (Table 2). The role of Central Italy is far lower, with 111 firms, while North-Eastern regions contribute with 80. Southern Italy participates with 23 enterprises: despite the geographical proximity of the area, Southern Italy confirms poor performances in terms of industrial internationalization. It is therefore easily to understand the presence of strong patterns of specialization that reflects the economic orientation of Northern Italian industrial structure: 63% of the participations (67% in terms of sales, 89% in terms of employment), concerns manufacture, and particularly textile, leather and clothes productions; Veneto is the most important region regarding investments in these sectors. Lombardy and Piedmont tend to invest more in chemical and mechanical industries, while Lazio in extractive ones. The situation is quite different in the case of commercial flows. Southern and Eastern Mediterranean countries represent important destinations for Italian commerce. First of all, it has to be noticed that the Mediterranean area in general represent, for Italy, the pivot of trade flows, absorbing in 2003 more than 30% of exportations and providing 25% of importations. Though most of these figures refers to the European rim (referring to 24% of exportations and 18% of importations), it has to be noticed that the importance of the Southern and Eastern side has grown during the 90s, particularly due to the rising role of Algeria, Lebanon, Turkey, Syria and Israel. The penetration of Italian products in the area is quite higher than in the case of other European countries, like France and Germany. Currently, the most important Italian partners are Tunisia and Lebanon – absorbing more than half of the commercial flows directed towards Mediterranean Africa – while, on the East side, Turkey and Israel. The Italian exportation profile includes some high-value products, particularly machinery, but is above all focused on many semi-fished products of the clothes and leather industry. In this framework, in 2003 Italy has been the most important commercial partner for Algeria and Lebanon, the second for Tunisia (the first is France), the third for Egypt, Morocco and Turkey, the fourth for Jordan, Israel and Syria. Exportations comes basically from Northern Italy, and particularly from North-Western regions, accounting for 44%. Considering the various regions, Lombardy is the most important (31%), followed by Veneto (11%), Emilia Romagna (10%) and Tuscany (7%).

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Table 10 : Number of inter-firm shareholdings in Southern and Eastern Mediterranean Countries by geographical area and economic sector

Number of participated foreign firms

Economic sector North-Western

Italy

North-Eastern

Italy

Central Italy

Southern Italy

Sicily and Sardinia Total

Extractions 12 0 6 0 0 18

Manufacture 499 36 43 4 2 58

4 Food, beverage and

tobacco 25 4 4 2 1 36

Clothes, leather, textile 276 15 7 0 0 29

8 Wood and furniture 20 2 4 0 0 26 Paper and publishing 13 0 0 0 0 13 Oil derived and fuel 7 0 2 0 0 9 Chemical 17 0 3 0 0 20 Rubber and plastic 22 1 1 1 0 25 Materials for

constructions, glass, ceramics

27 3 10 0 0 40

Metal 20 1 2 0 0 23 Machinery 19 4 5 0 0 28 Electric machinery 34 4 3 0 1 42 Equipments for transports 19 2 2 1 0 24 Energy, gas, water 3 0 0 0 0 3 Constructions 28 7 21 4 0 60

Commerce 87 22 15 1 2 127

Logistic and transport 36 9 13 1 6 65 Information and

communication 21 2 4 0 1 28

Other services 32 4 9 1 1 47

Total 718 80 11

1 11 12 932

Employment Turnover (millions euro)

73.161

6.443

5.788

508

10.704

2.641

342

33

92 19

90.087

9.644

Source: http://www.ice.gov (on May, 2005) Concerning importations, the most important areas are Lebanon and Algeria, providing with their oil and methane 80% of the value of the importations from South Mediterranean countries. The importation of these products is so relevant that the commercial balance between Italy and the African rim is negative (while it is positive in the case of the Asian one). It has to be noticed that such figures are quite lower that a decade ago, due to an Italian policy of diversification in the energetic supply (in favour of Venezuela and ex-URSS territories). The second typology of importations concern clothes and leather, due to the discussed process of relocalization of parts of the product cycle in the area, particularly

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towards Morocco and Tunisia. Differently from the exportations, importations are not only focused on Northern Italian regions, but also on some Southern territories, particularly Sicily (28%) and Sardinia (9,6%), due to the acquisition of crude oil (Sicily presents a certain specialization in chemical productions). Among the Northern regions, Lombardy is the most significant, providing 20% of the importations (Fig. 1)

Figure 14 : Exportations (on the left) and importations (on the right) from the South and Eastern Mediterranean countries, per region, 2003

Source: Società Geografica Italiana (2005)

2.6 Conclusion This brief analysis emphasizes a certain differentiation in the patterns of the Italian internationalization in the considered areas. First of all, the Italian weaknesses in terms of internationalization are evident: not only the investments are scarce, but quite limited to labour intensive sectors: such an emphasis on vertical investments testify a scarce orientation towards technology, strategic alliances, foreign market penetration. Moreover, it is evident that such kind of investments reveal some perils of labour-loss in the home country, a phenomenon often debated in Italy with the progressive closure (and relocalization) of labour-intensive industrial plants. This is certainly a problem that every developed country has to face nowadays, but the progressive erosion of Italian competitiveness, declared by international organizations such as OECD and World Economic Forum, emphasize the need for more (and maybe different) internationalization.

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Concerning the two considered areas of destination of Italian internationalization, it is possible to conjecture the presence of two rather different roles in front of globalization processes. Central and Eastern European countries confirm their nature of transition economies: they show a strong capability to attract investments. Even if the investments are concentrated on a few sectors, the investment profile is more various than in the South and Eastern Mediterranean case. Moreover, the import and export orientations are slightly different: Italy buys, besides minerals and oils, finished or semi-finished motor vehicles and clothes, probably as a consequence of multinational relocalization of Italian production chains. At the same time, Italy sells machinery and production tools of different nature, as a further evidence of a certain division of labour concerning high value sectors. In the case of Southern and Eastern Mediterranean Countries, such internationalization patterns are quite weaker, not only in quantitative terms, but also in qualitative ones. The economic relations between Italy and this rim assume the classical form of those between developed and developing areas, concerning the mere acquisition of inputs and the relocalization of low value added and low technology industries, notably leather and textile productions. The exportation of machinery, production tools and technology in general is, in this case, quite scarce. In terms of globalization typologies, the situation of Central and Eastern Europe seems to be that of a somehow active and increasing role in globalization processes; on the contrary, South and Eastern Mediterranean role is more passive and functionally dependent. This situation in even more severe if we consider the strong polarization of internationalization processes: few countries plays a relevant role, while the lack of infrastructures and political stability put other countries of the area in a position of functional and economic periphery. Such narrative on polarization, however, is not absent in Italy, where, at a different geographical scale, the peripherality of the Southern regions is, still today, an evident reality – being external to many forms of international economic integration.

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References

Dunning J. H. (1981), International Production and the Multinational Enterprise, Allen & Unwin, London.

Dunning J. H. (1993), Multinational Enterprises and the Global Economy, Addison-Wesley, Reading (Ma).

Grandinetti R. and Rullani E. (1996), Impresa transnazionale ed economia globale, Nuova Italia Scientifica, Roma.

Helpman E. and Krugman P. (1985), Market Structure and Foreign Trade, MIT Press, Cambridge (Ma).

Istituto Nazionale di Statistica (Istat) and Istituto Nazionale per il Commercio Estero (Ice) (2004), Commercio estero e attività internazionali delle imprese. Annuario 2003, Istat e Ice, Roma.

Istituto Nazionale per il Commercio Estero (Ice) (2004), L'Italia nell’economia internazionale. Rapporto Ice 2003-2004, http://www.ice.it.

Mariotti S. and Mutinelli M. (2004), Italia multinazionale 2004. Le partecipazioni italiane all'estero ed estere in Italia. Sintesi, Istituto Nazionale per il Commercio Estero, Roma.

Salabè C. (2001), Investimenti diretti esteri nei paesi del Mediterraneo, Note di approfondimento, Istituto Nazionale per il Commercio Estero. Area Studi, Statistica e Documentazione, dicembre; http://ww.ice.it

Sayer A. and Walker R. (1992), The New Social Economy, Blackwell, Oxford.

Shatz H. J. and Venables A. J. (2000), The geography of international investments, in G. L. Clark, M. Feldman and M. S. Gertler (eds.), The Oxford Handbook of Economic Geography, Oxford University Press, Oxford, pp. 125-145.

Società Geografica Italiana (2005), Scenari italiani 2005. L'Italia nel Mediterraneo. Gli spazi della collaborazione e dello sviluppo, Rapporto annuale della Società Geografica Italiana, Roma.

United Nations (Unctad) (2004), World Investment Report 2004, United Nations, New York and Geneva.

Rey V. and Molinari P. (forthcoming), L’Europe de l’Est entre européanisation et mondialisation.

Vernon R. (1966), “International Investment and International Trade in the Product Cycle”, Quarterly Journal of Economics, v. 80, pp. 190-207.

World Trade Organization (Wto) (2004), International Trade Statistics 2004, Wto Publications, Geneva.

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3. THE IMPACT OF DELOCALISATION ON THE POSITION OF EUROPEAN

REGIONS IN VALUE CHAINS

Laurent Aujean Gilles Van Hamme

IGEAT

3.1 The example of textile value chain in three marshallian district.

3.1.1. Justification of the case study and links to key question This case study comes within the scope of the key question about the internal differentiation of Europe. Globalization is supposed to have important impacts on Europe and, as a hypothesis, to its internal differentiation. One can discuss about this too general concept of globalization but the fact is that Europe becomes more and more open to the rest of the world because of the openness of economic boundaries. The general idea is that this growing economic openness of Europe will have different impacts at regional level regarding to the vulnerability or strength in the international competition. Textile industry is a perfect example when one is trying to link European regions to the rest of the world. General agreements on trade have more and more diminished the protection of European textile, and this sector is subject to an intense competition with the low labour cost countries. The reactions of textile regions to this growing competition is the main question we will focus on through the examples of three marshallian districts in Belgium, Denmark, and Italy. 3.1.2. Scale of the study Our study will focus on three cases of regions very specialized in the textile industry. These three areas could be considered as industrial or marshallian districts since they built a coherent network of small and medium interconnected enterprises mainly specialized in the textile industry, and often considered as the origin of good economic performances. These three industrial districts, located in the map 10, are: • Courtraisis, inside the Western Flanders ; • Prato, inside the Toscana (Third Italy);

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• Herning-Ikast, inside the Ringkoebing County of western Jutland. The table 11 gives a general idea of the importance of these three areas. As one can observed, the scale of these three examples is not the same, especially the Danish area covered is a much more restricted one, even if the dynamics we will put into the fore on this area concern a larger area. But in all cases the population of these areas are relatively small. Another spectacular difference is the local specialization in the textile industry: whereas Prato is a nearly mono-industrial region, the Courtraisis in Belgium and the Herning-Ikast municipalities in Denmark have a much more diversified economic structure. Finally, let’s notice the “Courtraisis” area represents nearly 37,8% of the national textile (for 5 % of the population), the Herning-Ikast district 26% of the very limited Danish textile industry, while this part is about 6% of Italian textile for the Prato province (only 0,4% of the national population).

Table 11 : Scale of the regional case studies around 2002

NUTS areas Population in 2003

Share of the national

population

Textile employment

in 2002

Share of national textile

employment

Part of the local

employment in textile industry

South of western Flanders

Three nuts 3 areas (arron-dissement) 506900 4,9 19466 37,8 8,2

Herning-Ikast districts

2 nuts 5 areas (municipalities) 82303 1,5 3803 26,0 7,8

Prato district 1 nuts 3 area (province) 232300 0,4 37017 6,1 40,4

Sources: http://www.istat.it/ pour l’Italie - O.N.S.S. et I.N.A.S.T.I pour la Belgique - http://www.dst.dk/

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Map 10 : location of marshallian industrial districts considered in this case study.

3.2 Context of case study

3.2.1 The concept of Marshallian districts and the conditions of their emergence Marshallian districts are very dynamic territorial system characterized by a dense network of interconnected and very specialized small and medium enterprises, generally oriented in light industry (Colli A., 1998). They emerged in very specific historical contexts. In most of the marshallian districts in Europe, we can identify from the literature several common characteristics which could explain the emergence of such specific local industrial network. Firstly, most of these districts have a long tradition in the textile industry, clearly anterior to the industrial revolution. Regions like interior Flanders, Cholet, Central Italy had an important homework industry from at least the eighteen century. This activity was a complement to agricultural production in very dense overpopulated areas and was dominated by a merchant class residing in the very dense urban regional network (Houssel J.P., 1995). This specific organization

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leaded to a social and economic crisis in the nineteenth century as they miss the train of the industrial revolution, but often more or less survived until the beginning of the twentieth century. Slowly, a local modern entrepreneurship emerged from the crisis. Nevertheless, the real expansion came after the Second World War with a complete renewal of the industrial infrastructure. It is interesting to notice that this expansion occurred in sectors of light industry completely abandoned by the big fordist industry. These activities never really interested the fordist transnational firms and the fordism-taylorism system has never been easily applicable in these sectors with the result that these specific flexible local networks have been able to concentrate some of these light industries. This dynamism has been prolonged after the crisis of the seventies, since the productive system of the marshallian districts were very adapted to the requirements of a post fordist flexible economy. We could say that they have been flexible before the flexible capitalism even emerged. Secondly, as we noticed briefly, these regions have built a dense network of small and medium interconnected enterprises using subcontracting and constituting strong informal relations. These enterprises are thus fully engaged in a complex dialectical process of cooperation and competition. This very flexible organization is able to answer quickly to the changeable demand of the market. Thirdly, these districts have been able to strengthen their initial success thanks to a process of rising in the technological value chain of textile industry, with innovations that could disperse through the entire regional industrial network. They could consequently evolve to the most promising segments of the textile, or even diversify to other sectors strongly linked to the textile value chain, such as metal production often developed on the basis of textile machinery (Scherrer F., Vanier M., 1995). Finally, we observe in most of these areas specific social features, notably what we could call an interclassist “common agreement”. It means concretely that from the worker to the manager, there is the same social and ideological framework. For example, the “Courtraisis” (south of Western Flanders) is dominated by what we could call the social-Christian pillar, while in Toscana, the communist hegemony guarantees the social cohesion even in business. 3.2.2 The international context The general context of these case studies is related to the so called globalization, which induces three main evolutions in our field.

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Firstly, there is a growing competition in the textile industry. This growing competition that Europe has to face is linked to the W.T.O. rules, notably the suppression of all limits of imports which came into force the 1.1.2005, and to the enlargement to the East and Central European countries. Secondly, related to this competition but mainly to gains in productivity, there has been a dramatic drop in the textile employment as you can notice from the table 12. On the same period of time (1984-1999), the production has significantly grown, except for Denmark, whose production is relatively marginal. These general evolutions don’t tell us about the evolution of the districts covered by this study but gives us the general context of crisis which they have to face.

Table 12 : Textiles output and employment in Belgium, Denmark and Italy, 1984-1999

Output (ECU million in constant 1990 prices)

Change Employment Change

1984 1994 1999 1984-99 1984 1994 1999 1984-99 Belgium 5112 5243 5612 9.8 61312 45326 41417 -27.8 Denmark 1375 1041 1069 -22.2 17395 12549 9941 -36.6 Italy 27861 32507 31874 14.4 434967 364324 338823 -22.4 EU12 101713 96809 90287 -11.2 1817611 1323711 1149535 -38.3 Source: DUNFORD M. (2004), The changing profile and map of EU textile and clothing industry

Finally, if we consider the impacts of globalization on regional level, one has to consider the re-metropolisation process. This process describes the economic recovery of the big metropolitan areas in the context of a post fordist flexible capitalism. In this new economic context, the old vertical firm is replaced by enterprises limited to their core activities, with a growing tendency of subcontracting the rest of their tasks. Metropolises are supposed to be better placed to answer this reorganization since they can offer a range of diversified service activities and sometimes strong connections between them. In this new context, the place of marshallian districts has to be discussed in a deeper way.

3.3 General hypothesis As a general hypothesis, we can suppose two kinds of reaction of the textile industrial districts regarding to the context of crisis and globalization they have to face, especially the growing competition with low wages countries of Central and Eastern Europe or eastern Asia. In one hand, these evolutions could produce a general crisis due to their specialization in a declining sector. But, on the other hand, the economic structure of interconnected small and medium enterprises is sufficiently strong to diversify and improves the economic activity. In this hypothesis, several ways are possible to face the crisis: diversification of the structure for example to other light industries, rising in the value chain with the production of textile machinery or chemical products, restructuring in favour of

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specific segments of high quality and added value. Our three case studies will perfectly illustrate these different possibilities. More generally, it is interesting to discuss the place of the marshallian districts in the new flexible capitalism, described here over, but also in this knowledge-based economy, where research and development, on one hand, and information, on the other hand, are supposed to be the key for the future growth. This structural change could have both positive and negative impacts on the marshallian districts. On one side, these regions are characterized by their flexibility and could be able to benefit of this new flexible economy, because of their capacity to adapt quickly to a very unstable market. On the other side, the insufficient diversification and the reduced size of the enterprises could be disadvantages in a knowledge-based economy, notably because of a relatively low qualified labour or the insufficient level of Research and Development. So, the future technological progress could be limited by the insufficient levels of education of the workforce, often trained from a very young age inside the enterprises, and by an insufficient access to research and development, as illustrated by their low level of patent.

3.4 Replicable methodology, problems, questions Our methodology will be followed in three steps: 1. To analyze the general response at both UE and national scales to the globalization and the textile crisis. Except the global indicators of output and employment in the textile sector, we will particularly focus on the structure of imports and exports flows at national level, drawn from the ITCS data base (trade on 7000 commodities between the OECD countries and all the other countries). Through these data, we could observe the evolution of the European countries in the international division of work in textile and clothing industry. Are these exports collapsing or do we observe a restructuring towards more technological segments of the value chain? More globally, this analysis could allow us to draw a general picture of the international division of labour in this industry and especially the place of Europe in it. 2. To search for the specific answers of the marshallian districts covered by this study. This will be firstly evaluated by general indicators: evolution of the GDP in a long time period if possible; evolution of the employment market and the level of unemployment. Secondly, we will focus on more specific and structural indicators: evolution of the employment textile, evolution of employment in the different segments of the textile value chain, the general evolution of the economic structure, especially the evolution of the research and development or in business services sector, which are often considered as the keys for the actual and future economic growth. These indicators will be as much

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as possible treated at the local scale described here over. But in some cases, notably to have longer time series, we should be obliged to use a less refined scale, to evaluate the regional evolution in which the districts are inserted. 3. Beyond this quantitative approach, the literature will be the main basis of this study, as it provides the best lighting to evaluate the structures and the recent evolutions of the areas covered here. Moreover, literature offers us a qualified and often relevant explanation of this industrial success which allows to replace it in specific historical contexts.

3.5 Empirical result of the case study: Specific reactions of the marshallian districts to globalization

3.5.1. Global evolutions of the marshallian districts The table 13 evaluates the general economic wealth of the three districts considered here, as well as their recent evolution.

Table 13 : Economic performances of some regions including industrial districts, 1995-2002 (National level is between brackets)

Average annual growth 1995-2002

Level of GDP/inhab in 2002 in % of European level

Unemployment

South of Western Flanders 4,54 (4,66) 119,5 4,5 (8,4) Prato 3,57 (3,93) 128 5,6 (8,0) Ringkoebing 5,19 (4,94) 123 4,7 (5,5)

Source: Eurostat

The recent evolutions show relatively low economic performances of these areas, lightly inferior to the national average, except for the Herning-Ikast district. This relative slowing down is interesting to underline as these areas have known strong economic performances for the last decades. We have no long term data at the scale we are working with, but we can still draw some conclusions from the level of GDP/inhab in some nuts 2 regions, in which the areas covered by this study are included. For example, Toscana was around 87% of the European level of GDP/inhab in 1960, while in 1984, its level was 114% of the European average, and maintains around 112% in 1990. During the nineties, regional accounts have been completely reviewed, and it is difficult to compare the data. We observe the same evolution in Western Flanders, with the level of GDP/inhab. in comparison of the European level which has grown from 85% to 106% between 1960 and 1990. It seems that, all things being equal, these specific districts are coming to the limit of their performances. But, this should not be exaggerated: firstly, economic performances are hardly below national one (it is thus more a relative

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decline than a real crisis); secondly, unemployment remains very low; finally, this tells nothing about the causes of the process and it seems that economic performances are relatively good if one considers the structural weakness of these districts because of the high share of declining industrial employment. 3.5.2. The case of southern Western Flanders (or Courtraisis) The Belgian Courtraisis is limited (Musyck B., 1995), at least in the statistics presented here, to three district South Western Flanders province: Kortrijk, Tielt and Roeselaere. Emergence of a marshallian district Coutraisis in the south of Western Flanders is very representative of the European marshallian districts. Innner Flanders has a very ancient tradition in the linen textile industry, in the form of homework industry in complement of a relatively poor agriculture, especially in the Lys valley, from at least from the seventeenth century. Industrial revolution has thrown this area in a deep crisis in the nineteenth century, except in Gent which has been the only pole of early modernization at the very beginning of this century. Elsewhere, local urban merchants continued to benefit from low cost of labour and have been unable to adapt to the new technologies that were taking place at the time. However, slowly, a local entrepreneurship emerged and modernized the industrial infrastructure on the basis of the existing structure, still very specialized in linen industry. It is interesting to notice that the big Belgian finance has never been interested in these crisis areas, where the industrial structure was very dispersed, with the result that local entrepreneurship has never been dominated by national investors. The post war development It is really after the textile crisis of the fifties that this region, still relatively poor, has emerged as a real endogenous area of strong development. As we already noticed, the GDP/inhab has grown from 85% of the European average in 1960 to 106% in 1990. This success is due to the conjunction of a new international context and the specific structure of this area. Europe has known exceptional growth in the post-war period, in a fordist context, where the biggest investors focused on specific fordist industries, those which allow high gains of productivity thanks to a segmentation of the work process. Light industry has been largely excluded from this process and remained more dispersed. Regions as inner Flanders have thus

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been able to modernize and diversify their industrial structure in specific sectors on a very endogenous basis. The table 14 illustrates the diversification of the industrial structure between 1958 and 2002. This autonomous growth is illustrated by the emergence of a local banking system to support this development and by the fact that most of the enterprises are still family-owned, even when they spread outside the region (Musyck B., 1995). The first thing to notice from this table is the remarkable stability of the industrial employment, whereas in the same time the national industrial employment has dropped from more than 1260000 to 680 000! As we can observe from the table, the district has been able to compensate the dramatic drop in textile and clothing industry by two main structural evolutions. On one hand, there has been a horizontal diversification to other light industry, especially furniture developed on the basis of an industry of panel of linen fibre, and food industry, strongly linked to the development of a vegetable culture. On the other hand, there has been a vertical diversification with a rising in the value chain of textile, for example by the production of textile machinery (45% of the national production) or even synthetic fibres (15% of the national production).

Table 14 : Evolution of the industrial structure, from 1958 to 2002

Employment in 1958

Structure of the industrial employment

in 1958

Employment in 2002

Structure of the industrial employment

in 2002

Textile industry 36950 50,1 17676 25,2 Clothing industry 9286 12,6 1912 2,7 Wood-furniture 7050 9,6 7931 11,3 Food industry 4292 5,8 10167 14,5 Electric, Mechanic , transport machinery and equipment 4291 5,8 10418 14,8 Smelting works, lamination and forges 3243 4,4 4025 5,7 Non ferrous ores 3149 4,3 2742 3,9 Metal works 1977 2,7 5426 7,7 Printing 777 1,1 2454 3,5 Precision instruments 620 0,8 481 0,7 Other manufacturing industry 2081 2,8 6989 10,0 Total manufacturing industry 73716 100,0 70220 100,0

Sources: Muysick (1995) for 1958; own evaluation on the basis of ONSS for 2002

In conclusion, south of Western Flanders has created a dense integrated network of small and medium enterprises, inserted in a very interdependent local civil society (the social-Christian pillar system). It has built a solid economy, less subject to delocalization than the industrial spaces dominated by transnational capitals (Vandermotten Ch., Marissal P., 2003).

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Recent Economic performance Because of its flexibility, the district has shown a remarkable capacity of adaptation to the new economic environment emerging in the seventies, the so-called flexible capitalism (Boyer, 1986). The economic performances (table 15) have remained very good after the seventies crisis and until the middle of the nineties. From 1981 to 2001, the employment has grown at the average rhythm of 0.45% each year while national employment remains stable. Unemployment is near the frictional level, around 4% of the active population. But when one looks at the most recent performances, signs of decline could be observed: between 1995 and 2002, the annual growth of the GDP has reached 3.40 % at maket prices, that is to say a performance lightly inferior to the national level (3.54 %). It appears that the drop in the textile employment is not anymore compensated by the development of integrated new industrial activities, and the tertiary growth is not always sufficient to compensate the industrial decline. It seems that the local flexibility and know-how are not sufficient anymore to face the strong competition with the rest of the world. They may have reached the limit of their capacity to improve their technology in the value chain, because of a lack of research and development and also may be qualification. Indeed, the level of diploma is relatively low in the Belgian context, with a strong predominance of technical education related to the traditional activities, and the workforce is traditionally trained inside the enterprises (Vandermotten Ch., Marissal P., 2003). However, one has to qualify such a dark picture of the situation. In no way, we can speak of a crisis, hardly a slowing down in the remarkable long term performances of the district. Moreover, most of this slowing down is due to structural effect more than a lack of local dynamism. It means that if you eliminate the fact that this region has a structure very oriented to some declining industrial sectors, the performances are still remarkable. 3.5.3. The marshallian district of the Prato The specific historical and cultural context The marshallian district of Prato is in many aspects very similar to the “Coutraisis”.

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Firstly, there is long pre-industrial tradition in the textile industry, mostly based on the wool weaving. From this long tradition, and despite of the crisis during the industrial revolution, survived a local network of active entrepreneurs and workers and a specific sectorial specialization. Secondly, the dense network of small towns from which the merchants organized the production is another common point with inner Flanders. Thirdly, and more importantly, there is this exceptional socio-cultural homogeneity, based on common ideological and political local culture. Here the communist party has played the role of the social-Christian pillar in the Coutraisis. These “subcultures” have endowed the necessary flexibility to such a complex economic system, especially in the working relations. In this context, we can speak of a real cooperation of workers and capitalists (Colli A, 1998) instead of class struggle. Indeed, the distinction between workers and managers is not always as clear as it could be in other production systems since many workers have founded their own enterprises. This creates a very sure economic environment which reduces considerably the cost related to work struggles and also allows confident relations between the different actors of the production system. We can also outline this apparent paradox of a dominant communist party which allows social peace rather than favour class struggle. Indeed, this domination dates from the second world war and is very linked to the specific social networks that pre-exist such a domination, for example a strong tradition of local democracy (the Italy of the municipalities typical of the central Italy) or the communitarian familiar system. In other terms, the social cohesion was strong before the communist party became dominant, and it only reinforces the cultural homogeneity. Industrial structures and recent economic performances The recent economic performances of the Prato districts are not what we could observe in Coutraisis. After a severe drop in the eighties, there is a significant recovery of the Prato district in the nineties. The most significant aspect is the growth of the industrial sector in a context of global de-industrialization. The pattern is thus quite different than the one observed for the Belgian district. But from this evolution, we cannot draw any general conclusion about the economic wealth of the Italian marshallian districts.

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Table 15 : Evolution of the employment in Prato, compared to Toscana and Italy, 1981-2001

Average annual growth,

1981-1991 Average annual growth,

1991-2001

Manufacturing

industry Total Manufacturing industry Total

Prato -2,60 0,07 0,24 0,93 Toscane -1,76 0,65 -0,60 0,66

Italie -1,07 1,15 -0,72 0,76 Source: 8° Censimento generale dell'industria e dei servizi 22 ottobre 2001, http://www.istat.it/

The table 16 will help us to understand this evolution, as it gives the structural evolution between 1991 and 2001. The first thing to underline is the exceptional weight of the manufacturing industry, mostly in the textile sector. While this part is about 31% of the employment for whole Italy and 33% in Toscana, it reaches the level of nearly 50% in the Prato, whose 40% in the textile industry. This means clearly that this district has never known the diversification we observed in the “Coutraisis” district in Belgium. The structure is more conform to a “pure” industrial district since we can observe a large amount of very small family enterprises, in different complementary segments of the same sector. Beyond this diversification inside the textile sector, the diversification has been very weak, except in the textile machinery. A priori, this overspecialization should be considered as a weakness but it appears that after the drop of the eighties, the district has known positive evolutions and even maintained in a difficult context the employment in the textile industry. Most recent data should be needed to confirm these evolutions for the last years, when the international competition increased severely. Nevertheless, we can argue that this district had an efficient answer to the challenge of globalization. This is due to a certain level to reorientation of the industry: the growth of the clothing industry, generally less qualified, means in fact the development of specific fashion industry; other specific segments have been developed such as “ennoblissement textile”, which is a sign that a technological rising in textile value chain. However, the resistance of the textile industry is not all, since we can notice that business services, often considered as the key for a actual and future growth in a post fordist economy, have nearly doubled in the nineties. It represents nearly 12% of the total employment (14 % in whole Italy), which is remarkable if you consider this sector has a tendency to concentrate in big towns.

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All these observations confirm the remarkable ability of the district to adapt its structures in a very changeable and unstable economic environment, notably with the growing competition of the eastern European and Asian countries.

Table 16 : Evolution and structure of the employment by section in Prato province, 2001.

Section Sector

Employment in 1991

Employment in 2001

Structure of the

employment in 2001

Agriculture 134 112 0,1 Extraction 5 0 0,0 Food industry 602 750 0,8 Textile and clothing industry 38020 37017 40,4 Whose Mills 10920 10330 11,3 Weaving 10800 7485 8,2 "Ennoblissement textile" 7081 7581 8,3 Other textile industry 9219 11621 12,7 Clothing 3019 5053 5,5 Leather and shoes industry 201 350 0,4 Wood industry 430 377 0,4 Paper ; printing; Edition 559 615 0,7 Chemistry, rubber and plastic industry 763 924 1,0 Non metallic ores 264 285 0,3 Metallurgy and metal works 848 1160 1,3 Machinery and equipment 1602 2315 2,5 Electrical Machinery 455 787 0,9 Fabrication of means of transport 15 42 0,0 Other manufacturing industry 586 601 0,7 Manufacturing industry 44345 45223 49,4 Distribution of gas, electricity and water 324 12 0,0 Building 6550 7953 8,7 Trade 17008 15826 17,3 Hotel-restaurant 1720 2211 2,4 Transportation and communication 2348 3258 3,6 Finance 1631 1968 2,1 Business services 5734 10836 11,8 Education 213 249 0,3 Health and social action 1106 1264 1,4 Collective, social and personal services 2299 2433 2,7 Total 83417 91545 100,0

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3.5.4. The Herning-Ikast district in Denmark The emergence of the marshallian district The late industrialization of Denmark at the end of the nineteenth century has begun in Copenhagen and in the others towns of the eastern part of the country. Less densely populated, Western Jutland remains a very rural and relatively poor region. However, in the last decades, the industry has considerably grown in the counties of Ribe, Rinkgoebing, Viborg, south and north Jutland, with a part of the national industrial production going up from 18% to 30% between 1971 and 1989. The Herning-Ikast district illustrates this dynamism. The textile production has begun in the seventeenth century, as a complement to a poor agriculture in a region dominated by sheep landes. The wool has given birth to a specific production of socks, mostly exported. This production has survived to the industrial revolution: local firms have manufactured and commercialized homework industry of hosiery. The social protection system has allowed these firms to survive from the crisis in the thirties. In the fifties and sixties, most of the experts foresaw the collapse of the hosiery industry, because of a stagnating market, of high production costs, of low level of qualification of the workforce, and of a relative isolation. Nevertheless, the district did survive, firstly thanks to taylorian rationalization, and then by the specialization of each production unit in specific niches, inside a broader network of enterprises; all evolutions which are typical of a marshallian district. Due this specific organization, these firms have shown a remarkable capacity of adaptation to the new flexible capitalism, characterized by a strong requirement of flexibility in a very changeable market. They pay a growing attention to the design and the quality; they modify frequently their products to adapt them to new demands. They also use the most modern machinery, but they invest more in research and development and design. In the working relations, the system has replaced the taylorian division of work by a specific management of the staff in small groups in order to avoid too repetitive tasks. Very significant of the working relations is the general attitude of the trade unions: despite of the high share of union members among the workers, it appears that their attitude pays more attention to the interests of the firms than to the national watchword.

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Recent evolutions We will now focus on the answer of this district to the growing international competition. The table 17 shows clear signs of low performances compared to regional and national environment: while until 1994, the Herning-Ikast district keeps good economic performances, in the last decade, the situation has deteriorated. The structural evolutions, as shown in table 18, will allow us to better understand these evolutions. Let’s notice first the structural differences with the two others marshallian districts. Firstly, textile industry represents only about 6% of the total employment, a share comparable to the southern Western Flanders, very inferior to what we observed in the Prato district. However this level reached 15% in 1994. Secondly, as we observed for the Belgian districts, there has been a clear diversification to other light industries, such as food, wood products and fabrication of metal products. However, unlike the southern Western Flanders, this district is not producing textile machinery, and forms a less complete textile value chain. In terms of performance, the evolutions shown in table 18 are spectacular, since the textile employment drops from 7300 to less than 2900 employees between 1994 and 2004. In the same time, others industrial sectors resist much better, with even a significant growth for metal products (+ 500 employees). The global level of employment could be maintained thanks to growth in some tertiary sectors, notably business activities and social institutions. Briefly, it seems clear that the textile crisis affected severely the Herning-Ikast districts. But, one has to qualify such a conclusion. Despite of this dramatic shift, the district could maintain a certain level of production and firms have still high levels of profit. As an answer to the growing competition, the labour intensive activities have been subcontracted to low wages countries, for example to Lodz in Poland. So it appears that the district has specialized in the fashion while the production has been delocalized in central and Eastern Europe. In conclusion, if the crisis could not be avoided because of the international competition, local firms have been able to react to this new environment: they developed new strategies, by delocalizing the labour intensive activities.

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Table 17 : Average annual growth of the employment of the Herning-Ikast district, in regard to its regional and national environment, 1984-2004

Annual growth of the employment 1984-1994 1994-2001 1994-2004* Herning-Ikast district 0,53 0,28 -0,26 Ringkoebing County 0,53 0,47 0,00 Denmark 0,27 0,72 0,31

* After 2002, figures are not perfectly comparable over the time. Thus the evolutions should be read only to compare regional performances. Source: http://www.dst.dk/

Table 18 : Evolution of the employment by sector in the Herning-Ikast district, 1994-2004

Employment in 1994

Employment in 2004*

Absolute evolution

1994-2004

Employment structure in

2004

Agriculture, horticulture and forestry 1839 1313 -526 2,86 Fishing 19 14 -5 0,03 Mining and quarrying 22 33 11 0,07 Mfr. of food, beverages and tobacco 1411 1276 -135 2,78 Mfr. of textiles and leather 7308 2855 -4453 6,22 Mfr. of wood products, printing and publ. 1788 1862 74 4,06 Mfr. of chemicals and plastic products 140 173 33 0,38 Mfr. of other non-metallic mineral products 441 370 -71 0,81 Mfr. of basic metals and fabr. metal prod. 2463 3042 579 6,63 Mfr. of furniture; manufacturing n.e.c. 1917 1435 -482 3,13 Manufacturing industry 15468 11013 -4455 23,99 Electricity, gas and water supply 289 154 -135 0,34 Construction 2062 2646 584 5,76 Sale and repair of motor vehicles sale of auto. fuel 1236 1160 -76 2,53 Wholesale except of motor vehicles 2654 3317 663 7,22 Re. trade and repair work exc. of m. vehicles 2797 3474 677 7,57 Hotels and restaurants 995 1122 127 2,44 Transport 1542 1817 275 3,96 Post and telecommunications 751 661 -90 1,44 Finance and insurance 1129 1037 -92 2,26 Letting and sale of real estate 537 597 60 1,30 Business activities 2326 3486 1160 7,59 Public administration 1963 1540 -423 3,35 Education 2837 2979 142 6,49 Human health activities 2130 2421 291 5,27 Social institutions etc. 3713 5052 1339 11,00 Associations, culture and refuse disposal 1708 1933 225 4,21 Activity not stated 289 144 -145 0,31 Total 46306 45913 -393 100

* after 2002, figures are not perfectly comparable over the time. Thus the evolutions should be read in order to evaluate main structural evolutions. Source: http://www.dst.dk/

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BENKO G, LIPIETZ A., 2000, La richesse des régions ; La nouvelle géographie socioéconomique Collection Économie en liberté, Presses universitaires de France.

BENKO G., LIPIETZ A., 1992, Les Régions qui gagnent: districts et réseaux: les nouveaux paradigmes de la géographie économique, Presses universitaires de France.

BIANCHI G., 1998, Requiem for the third Italy? Rise and Fall of a too successful concept, Entrepreneurship & regional development, 1

CAPRON H., GREUNZ L., 1998, Les remontées de filière dans les régions textiles et districts marshalliens: la troisième Italie, le Courtraisis. in, Wallonie et Bruxelles: évolutions et perspectives planification, aménagement du territoire et relations transfrontalières centre interuniversitaire de formation permanente treizième congrès des économistes belges de langue française nov. 1998

COLLI A., 1998, La mise en réseau des marchés. Observations et conjectures à partir de l’histoire des districts industriels italiens in, Wallonie et Bruxelles: évolutions et perspectives planification, aménagement du territoire et relations transfrontalières centre interuniversitaire de formation permanente treizième congrès des économistes belges de langue française nov. 1998

DUNFORD M., 2004, The changing profile and map of EU textile and clothing industry. In: Faust/Voskamp/Wittke (eds.), European Industrial Restructuring in a Global Economy. Fragmentation and Relocation of Value Chains. Göttingen (=SOFI, Berichte), pp. 295- 318)

HOUSSEL J.-P., 1995, Districts industriels et milieux intermédiaires, in Revue géographique de Lyon, n°1, pp7-18.

ILLERIS S., 2000, Adapting to Foreign Competition: The Textile and Clothing Industry in the Herning-Ikast Area of Jutland, Denmark. I Small Town and Rural Economic Development: A Case Studies Approach, eds. P.V. Schaeffer & S.Loveridge. Westport, Conn:Praeger.

ILLERIS S., 2000, Outsourcing of Textile and Clothing Industry from Denmark to Baltic Transition Countries. I Global-Local Interplay in the Baltic Sea Region, eds. J.W.Owsinski & M.Johansson. Warsaw: The Interface Institute.

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4. MIGRATION FLOWS AND IMPLICATIONS: CASE STUDIES ON FRANCE, HUNGARY AND SWEDEN

DANIEL RAUHUT

ITPS

4.1 Introduction Much of the debate regarding “replacement migration” has taken for granted that if Europe opens up its borders the needed labour will show up. This is, of course, an exaggerated view, something which has been pointed out by scholars in the field (Browne, 2002, Gee & Gutman, 2000, W.W. Rostow, 1998). To master the population decline, United Nations calculated that 1 840 million net immigrants are needed during the period 2000 to 2050 (UN Population Division, 2000). This figure is so high that it is not realistic to think that immigration is the one and only solution to the demographic challenges. The need for labour immigration and “replacement migration” is neither evenly spread between countries, nor between regions in the developed countries. Recent research indicates that the immigration flows are headed for the metropolitan areas in the “heptagon” (London-Hamburg-Munich-Milan-Paris-London) (Vandermotten et al., 2004), while peripheral parts of the European Union and the candidate countries face population decline and depopulation (ESPON project 1.1.4 Final Report). Three case studies will be undertaken to illustrate the differences in the migratory movements to countries in the European Union. The three studied countries are France, Hungary and Sweden. These countries do not only represent three different types of migratory movements, but also three different types of economic structures; the demand for labour is a part of the economic structure. This paper will start discussing the migration flows to the studied countries and the immigrants’ choice of settlement. A simple theoretical model will then be presented, followed by empirical evidence in the studied countries. Some scenarios for the future development will be then be discussed, and the concluding remarks will discuss the findings.

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4.2 Migration Flows 4.2.1. Hungary The migratory movements to Hungary are very modest; in 2000 the net migration to Hungary was only 18 000 persons plus 7 800 asylum seekers. A vast majority of the immigrants immigrated to Hungary from the neighbouring countries; approximately 50 per cent of all immigrants came from Romania, 10 per cent from Slovak Republic, 10 per cent from Ukraine and 10 per cent from Former Yugoslavia.3 This migration flow was dominated by ethnical Hungarians (Castles & Miller, 1994; Szoke, 1992). Another 10 per cent of the immigrants came from the European Union, and roughly 10 per cent of the remaining immigrants come from countries from the rest of the world (e.g. USA, China and Russia).4 Ethnical Hungarians moving to Hungary constitute about 80 per cent of the net migration to Hungary. Less than 10 per cent of all immigrants come from countries outside Europe. One reason for the large immigration from Romania is that the number of check-points between Hungary and Romania increased after the fall of the Communist system (Ilies, 2005).

Map 11 : Regional Neighbourhood immigration to Hungary in 2000

3 The OECD Migration Database. 4 Idem

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In 2000 about 7 800 asylum seekers entered Hungary, of which 1 500 were recognised as asylum seekers by Hungary before entering the country. An additional 900 were accepted as refugees by Hungary after an investigation. The asylum seekers were dominated by persons from Afghanistan, Bangladesh, Iraq, Turkey, India and Serbia-Montenegro. 5 After the collapse of the Communist system the Hungarian Government never feared a mass emigration of Hungarian, but to become a transit country for migrants who wanted to make their way to the European Union. Together with Poland, Czech Republic and Slovak Republic, Hungary had a relative affluence and a bad or under developed institutional structure to deal with immigration, which made the country attractive for refugees and want-to-be-immigrants (Castles & Miller, 1994; Toth, 1992; Szoke, 1992). In October 1991, the Hungarian government implemented new visa rules, which lowered the number of entrants to Hungary with 41 000 within a few days! (Szoke, 1992). 4.2.2. Sweden The labour immigration until the 1970’s was dominated by Nordic and South European labour. When the labour immigration declined around 1970, labour immigration was replaced by refugees and tied-movers, mainly from non-European and East European countries (Scott, 1999; Bevelander, 2000). Map 12 shows net migration to Sweden in the year 2000. More than 75 per cent of the net migration came from European countries, Russia, Turkey and the Middle East. About 400 net immigrants came from India, 700 from China and about 1 400 from Africa, which constituted about 10 percent of the net immigration to Sweden (Rauhut, 2004) For 2000, about 25 000 temporary work permits (valid for 3 until 48 months) were issued, together with just less than 450 permanent work permits (Rauhut, 2004). However, only 3 300 of them actually immigrated to Sweden.6 Relatively low salaries for well educated and relatively high taxes repel many presumptive migrants from immigrating to Sweden (Utrikesdepartementet, 2002; Lindh, 2002 and Rauhut 2002, 2004).

5 Central Statistics Office of Hungary 6 Statistics Sweden (2005)

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Map 12 : Regional Neighbourhood immigration to Sweden in 2000

4.2.3. France It must be stated clearly that there is no emigration data for France; France does not keep a record on the country of destination for persons emigrating. As a result, it is not possible to calculate the net migration between France and other countries. Furthermore, the result for France is therefore not fully compatible with the results for Hungary and Sweden. In 2000 France had a net migration of 40 000 persons. A very large share of the immigration to France comes from the former French colonies; in 2000 (Castles & Miller, 1994), approximately 160 000 persons immigrated to France and just less than 60 000 came from the former French colonies in Africa.7 Much attention has been given the East-West migration in Europe, (Layard et al., 1992) but the migration from the former French colonies in North Africa is just as interesting. This area has for long served as a French labour reserve, legal as well as illegal. Since migration flows have a tendency of

7 INED database

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following former migration flows, this area will most likely continue to send migrants to France (Castles & Miller, 1994). Besides the strong immigration from Maghreb and the former French colonies in Africa, the second biggest migration came from the countries of EU15 (about 43 000) and Asia (about 21 000). About 6 500 persons immigrated from North America and the same number from South America in 2000 (see map X.3). The immigration from the New Member Countries in Eastern Europe was very modest in 2000, only 3 000 persons. Another 2 000 came from Romania, 2 000 from the former Yugoslavian countries, and 2 000 from Russia. Just less than 6 000 persons emigrated from Turkey.

Map 13 : Gross immigration to France in 2000

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4.3 The Immigrants’ Choice of Settlement In general, immigrants are headed for the major metropolitan areas. In the United Kingdom 12 percent of the population is located in London during the period 1996-1000, while the share of immigrants in London was more than 40 per cent; more than 40 per cent of the immigrants to Italy settle down in Rome and Milan; Paris attract 36 per cent of the French immigrants (Vandermotten et al., 2004). In the case of Hungary, the immigrants favour Budapest (Vandermotten et al. 2005; Eurostat, 2005).The three metropolitan areas in Sweden attract most of the immigrants too (Häll, 1997). However, compared with map X.4 the settlement patterns of immigrants above do not fully correlate for France and Sweden. For France, the highest migration rate is for Languedoc-Roussillon and Alsace, with Paris only on third place. Languedoc-Roussillon attracts many retired persons from Europe due to its climate; the same kind of immigration of retired people is found in e.g. Spain and Portugal (ESPON project 1.1.4, 2005). Strasbourg is located in Alsace, and the European Parliament is situated in Strasbourg. This is probably the reason why the international immigration is so high to Alsace. In Sweden all regions in the country show a strong or very strong international net migration rate for 2000. One explanation is that the rural areas (Norra Mellansverige, Mellersta Norrland, and Övre Norrland) are sparsely populated. Quite modest immigrant flows will therefore indicate a “strong” international net migration rate, which is a statistical illusion. A second explanation is that asylum-seekers are placed in camps all over Sweden. When the Asylum-seekers receive a permission to stay in Sweden they get registered as immigrants in the county which the camp is situated in. Generally, there are no or few jobs in the rural and peripheral Sweden for immigrants, so they move to the three metropolitan areas and to the major cities where job opportunities are better (Häll, 1997, Hammarstedt, 2003).

4.4 Factor Prices and Substitutability: A Simple Model 8 In economic theory, the demand for labour depends on the total demand in the economy and on the alternative cost for replacing labour with capital. A labour shortage occurs when the demand for labour is higher than the supply and when the alternative cost for substituting labour with capital is too high. According to standard economic theory, the demand for labour depends on the fluctuations of short-term business cycles. In a short-term perspective, the opportunity cost for replacing labour with capital, i.e. investing in new technology, will be too high. If 8 This section is taken from chapter two in Gaspar et al. (2005)

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the labour shortage continues, or even worsens, over time, the opportunity cost of not replacing labour with capital will be too high. In a long-term perspective, labour shortage is not about being short of labour, but about lacking the capacity to adjust to the structural changes in the economy (Begg et al., 1987, Wonnacott & Wonnacott, 1986; Elliott, 1991; Fallon & Verry 1988). A consequence of labour shortage is that the cost for labour will increase, which is illustrated in figure 1. When the quantity of labour, QL, diminishes, and the quantity moves from Q1 to Q2, the price for labour, PL, will move from P1 to P2. As a result, a new equilibrium will be achieved (see figure 1).

Figure 15 : The Relation between the Quantity of Labour and the Price of Labour

PL

QL

P2

P1

Q2 Q1

Labour shortages can be “partial” and “general”. A partial labour shortage occurs when there is a shortage of labour in a specific profession or sector of the economy, e.g., farm workers, nurses, bus drivers or construction workers. A general labour shortage is a result of demographic changes in the population, i.e., there is a shortage of labour in all professions and sectors of the economy (Rauhut, 2002). According to economic theory, it is possible to estimate the effects of changes in the relative prices of a factor commodity (as shown in figure 1), especially when it comes to the demand for that specific factor commodity and substitution effects. Given the assumption that a company is profit-maximising, a shortage of a factor commodity will result in an increase in its price. As a consequence, this specific factor commodity will be replaced by another, cheaper, factor commodity. If it is labour that is in relative shortage, capital will be substituted for labour. Elliott states that the “substitution effect distinguishes the firm’s

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reaction to the change in the relative price of capital and labour, holding constant the scale of production” (Elliott, 1991) Begg et al. state that “the substitution effect leads the firm to produce a given output using a technique which economizes on the factor that has become relatively more expensive. Thus, a rise in the wage rate of labour leads to a substitution effect towards more capital-intensive production methods at each output” (Begg et al 1987). According to Wonnacott & Wonnacott, “in a competitive, fully employed economy, the wage rate increases as productivity increases. This conveys a clear message to those producers who can no longer afford the higher wage. The message is: society can no longer afford to have its scarce labour employed in your activity. There are now too many other, more productive pursuits. This may seem harsh, but it is the sign of economic progress” (Wonnacott & Wonnacott, 1986). There are, in general, five ways to deal with a relative change in the price of labour (Rauhut, 2003).

i. If the relative factor price for labour increases on a short-term basis, the increase in cost will be paid by the consumer of the commodity or service.

ii. If the relative factor price of labour increases on a long-term basis, capital will, if possible, be substituted for labour.

iii. If the relative factor price of labour in labour-intensive production increases on a long-term basis, organisational or institutional changes will take place in order to use the labour more efficiently.

iv. If the relative factor price of labour increases on a long-term basis, labour in-migration can be used, provided that imported labour can replace domestic labour. This is easily done for some sectors of the economy, but for others, it is more troublesome to replace domestic labour with immigrated labour.

v. If the relative factor price of labour increases on a long-term basis, labour-intensive production will be moved to countries where labour is cheap and in abundance.

An increase in wages is to be expected when labour is scarce, which leads to an increasing wage ratio in the production. When the marginal cost of a continued increase in production is higher than the marginal cost of substituting capital for labour, institutional, organisational and technological changes will be required in order to replace the scarce and expensive factor commodity labour in production. Despite using less labour, production will be kept up due to increased productivity. This is so not only because firms are profit- maximising, but also because they are cost minimising (Fallon & Verry, 1988).

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However, there are no clear-cut results (whether theoretical or empirical) that show a link between a change in the population structure and its economic effects. The results are dependant on the assumptions that have been made. Depending on the institutional and organisational changes that take place at the time of the population changes, population decline can result in both positive and negative economic developments (Rosenberg & Birdzell, 1986; Easterlin, 1996; Kelley & Schmidt 1994; Coale & Hoover 1958). Historically, situations of long-term labour shortage have led to labour being replaced through technological, institutional and organisational changes. This has meant that productivity improvements have resulted in increased growth. The creation of an economic surplus through economic growth is a condition of welfare (Boserup, 1981; Rosenberg & Birdzell; 1986; Dillard, 1967; Rider, 1995; Cameron, 1997). How threatening or challenging are the unfavourable future demographic development, causing depopulation and short-term labour shortage? It is not a question of just getting immigrants to fill up population gaps; it is a question of getting the right labour with the right competence and skills as well as getting them to the right geographical areas.

4.5 The Future Immigration Demand The labour immigration to the industrial sector in Sweden until the 1970’s was dominated by Nordic and South European labour. In the Fordist production system in the 1960s, labour could generally be put to work quickly after arriving in the new country. The immigrant was given a short introduction to the workplace and was then able to carry out the work in a Fordist production model. There were no requirements for location specific knowledge – e.g., knowledge of language and culture – for these labour immigrants in industrial production during the 1960s. In other words, substitutability between foreign and domestic labour was high. Unfortunately, there was a negative aspect of the labour immigration: it counteracted the structural transformation of the Swedish economy, as stagnating trades and sectors could keep afloat through access to cheap labour. When the crisis came in the 1970s, the bubble burst and companies within these trades and sectors went under. The immigrants remained, and since then, they have had a weak tie to the Swedish labour market (Lundh & Ohlsson, 1994, 1999). Today, Sweden’s economy is not based on industrial production, but on services. Within the areas of nursing, education and care, location-specific knowledge is usually required to carry out the work; this means that substitutability between foreign and domestic labour is limited.9

9 For a more detailed discussion on substitutability, see Rauhut (2002, 2004). For some occupational groups

within nursing, education and care, the production value is so high that it is worthwhile for the employer to

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A study on replacement migration to Sweden showed that it will be more difficult than many might think to find labour for female-dominated professions within the public sector (nursing, education and care) in the rural and peripheral parts of Sweden; in the metropolitan areas around Stockholm, Gothenburg and Malmö there is no shortage of labour. Most of the professions require tertiary education. It is far from obvious that Sweden will succeed in recruiting male labour to the female professions from countries where gender equality has not come very far or is non-existent (Rauhut, 2004). The former French colonies, especially Tunisians, Algerians and Moroccans, served for long as a labour reserve during the Fordist production era. A large share of the immigrated labour was employed in the industrial sector in the 1960s, and in particular the automobile sector (Vandermotten et al., 2004; Castles & Miller, 1994), where substitutability between foreign and domestic labour was high. However, these immigrants “were relegated to the bottom of the labour market, often working in highly explorative conditions. Housing was frequently segregated and very poor in quality – indeed shanty towns (known as “bidonvilles”) appeared in France in the 1960s” (Castles & Miller, 1994). The immigrant profile in France looks different in the 1990s: the share of women is higher, and the level of education is higher, many “white-collar” workers and high level managers. It’s not only young, low educated single men immigrating to France anymore; many immigrants are tied-movers who come to be reunited with the family (Vandermotten et al., 2004). Since such large shares of the immigrants come from francophone countries and former French colonies, the immigrants do not suffer from an insufficient location specific knowledge as immigrants do in Sweden. Contrary to Sweden, substitutability between foreign and domestic labour in France is still high. However, similar to Sweden, immigrants chose to settle in the metropolitan areas. International migration was rare in Hungary during the Communist era. Immigration was close to zero, and the only emigration that took place occurred in 1956; after the Soviet Union invaded Hungary to crush the reformist movement, a large number of political refugees escaped Hungary. After the collapse of the Communist system in Eastern Europe, Hungary was used as a transit country for migrants headed for Western Europe. Many ethnical Hungarians in the neighbour countries have immigrated to Hungary after the collapse of the Communist system (Castles & Miller, 1994). Most of the post-

send a person recruited from abroad, for example, a doctor, on a six-month intensive course in Swedish and then six months experience to learn how the Swedish healthcare system works. Within other professional groups such as staff nurses in old-age care, the production value is too low and it is not worthwhile for the employer to make the same investment (Rauhut 2004).

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war emigration and immigration to Hungary has not had economic causes, but political and socio-cultural causes (Rothschild, 1989; Szoke 1992). The substitutability between foreign and domestic labour in Sweden is low, the migration flows to Sweden are small and presumptive immigrants with work permit in Sweden never enter the country. The greatest demand for labour is in the rural and peripheral parts of the country, while immigrants in general settle down in the three metropolitan areas. Unless a future immigration aims at just filling up a population gap, immigration is not an option for Sweden to solve the future demographic challenges. Sweden must chose a long-term solution by favouring technological, institutional and organisational changes and use a very selective immigration policy to ensure the immigration of specialists. France has a steady flow of immigrants from its former colonies, and the substitutability between foreign and domestic labour in France can be assumed to be high. The share of well-educated has also increased amongst the immigrants to France. Contrary to Sweden and Hungary in the European periphery, France is situated within or just outside the “heptagon”, an area considered to be the heart of Europe and an area attracting immigrants. However, similar to Sweden, the immigrants are headed for the metropolitan areas, and not the rural or peripheral areas in France where they are needed the most. Nevertheless, immigration can be used to deal with the demographic challenges in France. Hungary has had no colonies nor established international immigration flows. When the immigration of ethnical Hungarians ends, the immigration will be even smaller. As a member of the European Union immigrants headed for the European Union cannot use Hungary as a transit country anymore. Just as in the case of Sweden, immigrants are needed in the peripheral parts of the country, while the immigrants prefer to settle down in the metropolitan area of Budapest. Furthermore, as the old industrial sector and planned economy is transformed into a service sector based capitalist economy, the substitutability between foreign and domestic labour in Hungary is low (except for ethnical Hungarians). Immigration cannot be a solution to the demographic challenges in Hungary.

4.6 Scenarios 10 Each region in France, Hungary and Sweden will be under the influence of structural changes at the industry level, which renders changes in the labour demand for given skills in the short and medium term. Changes in the composition and production portfolio of sectors will change the demand in the 10 This section is based on Edvardsson et al. (2005)

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regional labour market for low, medium and high skilled labour and for specific competences associated with sector specificities. The impetus for these changes may originate from many sources. One source is the competitive pressure from “outside”. This competitive pressure may come from changes in policies or may come from the exhaustion of previously regional strongholds in the production process in specific sectors. The policy change may relate to national or international measures. The national measures may relate to the location of national knowledge resource centres, which may be pivotal for the destiny of sectors dependent on such resource centres. The international measures relate to the strong forces towards integration of product markets internationally. Tradable goods have increasingly reach accessibility to a wider set of geographic markets through policies of free trade and the adjoin changes in transport technologies making transportation a minor portion of the total cost of products. EU enlargement is one such example of the emphasis of extending market access to increase international trade and thereby increasing the presence of regional structural change. The competitive pressure may also originate from the exhaustion of regional resources. The presence of bottlenecks on the labour market and the possibly associated increases in regional wages will make the firms located in a region less competitive relative to region with ample resources at their disposal.11

Figure 16 : Intersections between regional trends and EU enlargement

11 The extent that such pressures from regional resources in the competitiveness will materialise will to a large

extent depend on the labour market mechanisms present in the regional labour markets, which has at a Nordic scale previously been analysed by e.g. Persson et al. (2004).

Region i

Structural transformation

(short-term) Demand

Demographic Change

(long-term) Supply

Labour migration (short-term)

Supply ”IN-SOURCING”

OUT-SOURCING

International compe-titive pressure from low cost countries

Regional Attrac- tiveness

Regional Attrac- tiveness

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Source: This is a slightly revised model originally sketched out by Edvardsson et al. (2005) Firm choices will obviously be interconnected with the individual choices in a region. Individual choices will in the medium and long run change the labour supply from regional residents. Migration to other regions will change the labour supply in the medium and short run, but ageing and a low fertility will reduce the regional labour supply without any out-migration. The demographic changes in the incumbent population of the region will therefore reduce labour supply of all skill types in the long-run. Demographic renewal from other regions is one solution.12 The present analysis will therefore focus extensively on the possible demographic renewal that may possibly be obtained from immigration to the different regions of the Nordic countries. Immigration from the enlarged EU or countries outside the EU may solve for the problems of skilled labour supply in the medium and long run and thereby contribute to the solution of the competitiveness of regional industries. The individual choices of immigration to the regions in France, Hungary and Sweden may solve for the labour shortages that may pose problems for sector competitiveness faced under the firm choices in the same region. Above all these mechanisms of interaction between regional trends determined by choices of incumbent firms and individuals and international trends of competition from low cost countries and immigration from the same countries will be a rather intangible regional attractiveness. This regional attractiveness will influence both firm choices and individual choices and thereby endogenously determined the outcome for regions. This indicates that this factor is to a large extent endogenous. It may though also capture trends in regional policies in the different countries and preferences among individuals for certain characteristics of the region of residence. Shifts in these factors may in dynamic ways influence the regional attractiveness of different regions with different urban structures and different degrees of peripheral status. Regional attractiveness may also depend on the actions taken by regions themselves. Regions may through different regional policies be able to change their relative position on the national and international scale of regional attractiveness. This is most clearly seen in national contexts, where metropolitans compete internationally for investment. National policies may though also contain elements that promote the regional attractiveness. Given regions have some autonomy in terms of settling policies that are adapted to the specificities of the region and are able to finance such policies either though decentralised tax collection or national subsidies, the 12 This has also been analysed by Persson et al. (2004), as has the medium and short run effects of out-migration

from regions. See also Gaspar et al. (2005) and ESPON project 1.1.4 (2005)

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regions may furthermore change their attractiveness through means such as investments in culture, knowledge and infrastructure. The exact outcomes of regional attractiveness are accordingly diverse depending on the location of regions and the different policy measures at hand to promote regional attractiveness.

4.7 Concluding Remarks The immigration to France, Hungary and Sweden show three quite different patterns. The immigration to Hungary mainly comes from the neighbour countries; in the case of Sweden, the sender countries are European or in the European neighbourhood. The migration flows to France are from all over the globe. Sweden has experienced a labour immigration during the 1950’s and 1960’s, but since then the demand for foreign labour has been low. Contrary to this immigration has remained high, based on refugees and family reunions. France has experienced a high immigration for a long time, especially from their former colonies. Hungary has not faced immigration in a larger scale until the 1990’s – immigration during the Communist era was rare. Since the 1990’s ethnical Hungarians are headed for Hungary as well as some refugees. Compared with the results on demographic trends and depopulation from ESPON project 1.1.4, the settlement patters of immigrants presented here are not the optimal settlement patterns to achieve a sustainable population development in the European regions. To achieve sustainable population development immigration is needed to the rural and peripheral parts of Europe, but these areas are rejected by immigrants as they are headed for the metropolitan areas. The demand for foreign labour will depend on the regional structural change in the economy. In what extend domestic labour can be substituted with foreign labour is also of great importance here. The exact outcomes of regional attractiveness depend on the location of a specific region and on the different policy measures at hand to promote regional attractiveness. There is no “one-size-fits-all” solution to this.

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4.8 References

BEVELANDER P., 2000, Immigrant Employment Integration and Structural Change in Sweden 1970-1995. Almqvist & Wiksell International

BOSERUP E., 1981, Population and Technology. Blackwell BROWNE A., 2002, Do We Need Mass Immigration? CIVITAS CAMERON R., 1997, A Concise Economic History of the World. Oxford

University Press CASTLES S., & MILLER M.J., 1994, The Age of Migration. MacMillan DILLARD D., 1967, Economic Development of the North Atlantic

Community. Prentice-Hall EDVARDSSON I.R., HEIKKILÄ E., JOHANSSON M., JOHANNESSON H.,

RAUHUT D., SCHMIDT T.D. & STAMBØL L.S., 2005, Demographic Change, Labour Migration and EU-Enlargement – Relevance for the Nordic Regions. Paper presented at the NÄRP-meeting in Stockholm, Sweden, 8 November 2005.

ESPON project 1.1.4 (2005) The Spatial Effects of Demographic Trends and Migration. Final Report

GASPAR et al, 2005, Ageing, Labour Shortage and ‘Replacement Migration’, Annex B to ESPON project 1.1.4 Final Report. Centro de Estudos Geográficos, Universidade de Lisboa

GEE E., GUTMAN G., (Ed), 2000, The Overselling of Population Ageing. Oxford University Press

HAMMARSTEDT M., 2003, Kan geografisk rörlighet och integration förenas?, Ett rörligt arbetsliv. FAS

HÄLL L., 1997, “Immigrants and Native Swedes”, J. Vogel (Ed.) Living Conditions and Inequality in Sweden – a 20-year Perspective 1975-1995. Statistics Sweden report 91

ILIES A., 2005, “The peculiarities of the human mobility frame in the Romanian-Hungarian and Romanian-Ukrainian border area”, Belgian Journal of Geography, 2005:1-2

LAYARD et al., 1992, East-West Migration. The Alternatives. MIT Press LINDH T., 2002, “Åldersstrukturen och de offentliga finanserna”, Molander

& Andersen (red.) Alternativ i välfärdspolitiken. SNS förlag LUNDH C., & Olsson R., 1994, “Immigration and Economic Change”, in

Bengtsson (Ed.) Population, Economy and Welfare in Sweden. Springer Verlag

LUNDH C., & OLSSON R., 1999, Från arbetskraftsimport till flyktinginvandring. SNS förlag

PERSSON L.O., EDVARDSSON I.R., HEIKKILÄ E., JOHANSSON M., SCHMIDT, T.D. & STAMBØL L.S., 2004, Economic Renewal and Demographic Change. Nordregio R2004:8

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RAUHUT D., 2002, Arbetskraftsbrist och arbetskraftsinvandring: hot eller möjlighet för ekonomisk tillväxt? ITPS report A2002:010

RAUHUT D., 2004, Replacement Migration to Sweden. Swedish Institute for Growth Policy Studies

RIDER C., 1995, An Introduction to Economic History. South-Western College Publishing

ROSENBERG N., BIRDZELL JR., L:E., 1986, How the West Grew Rich: The Economic Transformation of the Industrial World. Basic Books

ROSTOW W.W., 1998, The Great Population Spike and After. Oxford University Press

ROTSCHILD J., 1989, Return to Diversity. A Political History of East Central Europe since World War II. Oxford University Press

SCOTT K., 1999, The Immigrant Experience: Changing Employment and Income Patterns in Sweden 1970-1993. Lund University Press

SZOKE L., 1992, “Hungarian Perspectives on Emigration and Immigration in the New European Architecture”, International Migration Review, Special Issue on the New Europe and International Migration, 26:2

TOTH J., 1992, “Changing Refugee Policy in Hungary”, Migration World Magazine 20:2

UN Population Division, 2000, Replacement Migration. UTRIKESDEPARTEMENTET, 2002, EU:s utvidgning och arbetskraftens

rörlighet. SOU 2002:116 Fritzes förlag VANDERMOTTEN et al., 2004, Migrations in Europe – The Four Last

Decades. Società Geografica Italiana VANDERMOTTEN et al. 2005, ”The geography of migratory movements in

Europe from the Sixties to the present day”, Belgian Journal of Geography, 2005:1-2

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Partie V

ESPON & Neighbouring countries

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5. RUSSIA AND EUROPE: THE SCALES AND GEOGRAPHIES OF A COMPLEX

NEIGHBOURHOOD RELATION

Yann Richard LADYSS

Russia is a very particular neighbour of EU. It is by far the largest one, with a surface covering roughly 17 million km². And in the political and economic agenda of the European commission and of the EU members, its importance is growing up rapidly for several reasons. The dependency of EU from imported energetic resources such as crude oil and gas is increasing and is foreseen to grow rapidly in the nearest future. Russia is the second largest producer of crude oil in the word and possesses the largest reserves of natural gas. Besides, its territory is so large that it is a transit territory for energetic imports coming to EU from other countries (Central Asia). At last, Russia is by far the first supplier of energy resources for a significant number of EU member states whose dependency on Russia reaches 90 or 100% in some cases. Over the last decade, the share of Russia and CIS in the energetic imports of EU has been increasing dramatically. The political relations between EU and Russia are complex, mainly because of chaotic relations between this neighbour and the new member states. There is still no definitive agreement yet between Russia and Latvia and Estonia about their common border. The agreement had been signed by foreign ministers in 2005, but Russia has finally decided not to ratify it. There are many other subjects of discontents: political relations of Russia with the Baltic States are bad since the middle of the 1990s because of the EU and NATO enlargement process; the relations with Poland are so bad that many diplomats from both countries have been recently evicted; the status of Russian minorities; the Kalinigrad issue... One could say the same about Belarus. Its relations with Poland, for instance, have been bad for a long period of time and they have even worsened since 2005 because of the treatment of the Polish minority. This is of course not a complete list. In addition, this part of the external border of EU seems to be quite closed. The goals of this study are the followings: - To analyze the evolution of EU – neighbourhood relations at different scales since the 1990s and to explain these evolutions. Does this relation evolve the same way and at the same pace for EU as a whole, for CEE countries, for Latvia and at last for border regions? - To understand the place and role of the Baltic States in the frame of relations between Russia and EU. Are they still a part of the interface between Russia and Europe or not?

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- To know if there is any relation between this border problem and the most recent evolutions of Latvia’s and Estonia’s territories. Several topics are taken into consideration: - The economic relations: foreign trade at various scales; - Foreign direct investment flows and stocks; - The cross border cooperation in the frame of the Interreg III A Priority North (Estonia-Russia) and Priority South (Latvia-Belarus).

5.1 What is the state of the economic relationship between EU and Russia, at different scales?

As far as the economic relations (mainly trade and foreign direct investments) are concerned, one can notice that Russia is getting more and more incorporated in the European economic region. Nevertheless, on the one hand, this process is not going along the same way or with the same rhythms at each level. On the second hand, it varies a lot according to the topic taken into consideration (trade of goods, services, investments…). Evolution of economic relations between Russia and EU: Russia is getting more and more integrated in the European economic region. Except for the period that followed the Russian economic crisis, the exchanges of goods between Russia and EU have dramatically increased since the 1990s in both directions. The increase of oil and gas tariffs is not enough to explain this increase. The exports from EU to Russia have followed the same evolution. In addition, the imports of EU from Russia had already increased a lot between 2000 and 2001 before in the oil crisis which caused the increase of oil tariffs. EU 25 is now the first external trade partner of Russia, which is partly due to the recent enlargement in 2004. The share of EU 25 now represents more than 50 % of the total external trade of Russia. Reversely, the share of Russia in the total external trade of EU 15 has also increased since the end of the 1990s, from 1.9 % to 3 % between 1999 and 2002. As far as UE 25 is concerned, one can draw the same conclusions, according to the data released by Eurostat. The trade with Russia has undergone a 51 % jump between 2000 and 2004. The share of Russia in EU 25 total external trade has gone from 4.5 % up to 6.3 %. These figures show that Russia is getting more and more involved in a process of economic regionalisation along with the rest of Europe. Russia is not the only one concerned by this process. While the share of EU 15 has constantly decreased in the external trade of EU 15 members since the 1990, the share of other neighbour countries has constantly grown up showing an enlargement of the European economic region.

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Figure 17 : Evolution of Russian exports and imports to and from the countries of the Triad.

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Figure 18 : Evolution of UE 15 exports and imports to and from neighbour countries.

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Figure 19 : Evolution of exports and imports (in euros) of EU 25 from 2000 to 2004.

However, this assumption must be qualified. The process of regional integration is mainly based on exchanges of goods and raw materials. Besides, it concerns more the EU 15 and EU 25 as a whole than the new CEE members of EU. The total external trade of CEE countries has dramatically increased since the 1990s, but the share of Russia in that trade has fallen down for all of them. The only cases of stability are the Czech Republic and Slovakia whose exports towards Russia have always remained stable, around 5 % of their total exports. As far as the imports of the CEE are now concerned, the flows have been staying roughly up to the level since the 1990s until the 2000s. This is largely due to the importance of Russia as the main supplier of oil and gas for the best part of Central and Eastern Europe. The reorientation of CEE

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countries exports from the East (former USSR) to the West has given way to the formation of a border line between former USSR and the central part of the European continent. The Russian market has become less attractive for the CEE countries because of the economic crisis. Besides, their economic structure has significantly changed with a shift from industries towards service activities. Consequently it no more matches the needs of the Russian economy.

Figure 20 : Evolution of Russia’s share in the external trade of some CEE countries.

As far as the foreign direct investments are concerned, one must say that Russia remains a closed economic space. It remains relatively unattractive for foreign investors and nothing has been made for years to attract them. Flows and stocks of foreign direct investments have dramatically increased in the world from the 1990s onward, going up to 8 250 billion dollars in 2003 from 693 billion dollars in 1980. The FDI stock has also increased in Russia, but it remains modest, as well as in the other western CIS countries such as Belarus, Moldova and Ukraine. In 2002, the FDI inward stock in Russia was only 48 USD per inhabitant, but it was 3 554 USD in the Czech Republic and 1 846 USD in Estonia. And in the CIS, Russia is only rated 10th for the amount of FDI per inhabitant: the CIS average is

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242 USD and it reaches 938 USD in Kazakhstan. The situation has changed a little in 2004 thanks to the reforms set up by president Putin’s administration, especially in the fiscal area. The FDI stock in Russia has jumped up to the record level of 99 billion dollars. However, nothing indicates that this change is the starting point of a long term trend. - Such a phenomenon had already taken place in the beginning of the 1990s but it brutally ended because of the economic crisis in 1998. - 99 billion dollars is almost a twofold increase compared to the cumulative stock in 2003. However it remains modest for a country of 143.5 million inhabitants with a rapid economic growth (FDI stock in Poland in December 2004 reached more than 84 billion dollars). FDI flows are somewhat more diversified than before, going to economic sectors such as retail trade, transports, food industries and so on. Nevertheless, oil is still playing an important role, attracting a large part of FDI flows but without a significant number of new jobs created and without significant transfers of technologies. - An important part of the direct investment stock officially comes from foreign countries but is actually composed by Russian capital returning to Russia through Luxemburg, Cyprus, Virgin Island, UK, Gibraltar... - At last, even if EU is the first foreign investor in Russia, it concerns a relatively modest stock. It still represents less than 1 % of the Russian GDP and only 11 % of the gross fixed capital formation.

Figure 21 :FDI inward flows and inward stocks.

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How are the economic relations between Russia, Estonia and Latvia going on? The decrease of trade relations.

Figure 22 : Rhythm of evolution of external trade of Estonia and Latvia.

The evolution of trade relations with Russia is not going on the same way for Latvia and Estonia. It can be seen on the graphs above dedicated to the evolution of the exchanges of goods. As far as Estonia is concerned, the external trade has strongly increased with the new members of EU (candidate countries), and secondarily with EU 15 and the Baltic region. The external trade with Russia has also grown up, with a roughly 150 % increase, but this is much less than with other trade partners. In the case of Latvia, the evolution is a bit different. This country is getting rapidly integrated in the Baltic region and its external trade with EU 15 has increased a lot whereas its trade relations with Russia have decreased. Consequently, the share of Russia in the external trade of Estonia and Latvia has fallen down. Russia’s share in Estonian’s export reached 36.5 % in 1997 but fell down to 12.3 % in 2003. Its share in Latvia’s export has gone from 41 % in

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1997 down to 14 % in 2003. The imports of goods have followed the same evolution. Russia’s share in the total imports of Estonia has decreased from 35.7 % to 18.4 %, and it has decreased from 33.4 % to 17.8 % in Latvia’s imports. Although Lithuania is not taken into account in this case study, we can remind here that the evolution of its external trade towards Russia has followed the same evolution. Its exports to Russia reached 24 % of the total in 1996 but 10.1% in 2003; the share of Russia in its imports was 29% in 1996 and only 22.1 % in 2003. The border effect on foreign direct investments. As far as the foreign direct investments stocks are concerned, one can notice two main facts: - The presence of Russian investment stock is weak in both Baltic States as it can be seen on the second graph concerning Latvia. Russian investments are mainly oriented towards the countries of the CIS (especially Ukraine and Belarus) and secondarily towards certain countries belonging to the EU 15. - In the opposite direction, the outward FDI stock owned by Baltic States abroad is clearly concentrated in the Baltic region and especially in the other Baltic States but not to Russia. As it is shown on the graph below, the Estonian outward FDI stock has been increasing rapidly from 2000 onward but it has remained very low in Russia. This country is not attractive for Estonian investors, and investors from other countries in general, because of several burdens: unclear legislation especially regarding the fiscal domain; insufficient level of liberalisation and high level of state control in economic sectors such as energy and transports; inadequate business climate because of unclear administrative rules…

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Figure 23 : Foreign direct investments in Estonia and Latvia.

How to explain the decreasing trend in the commercial relations?

The successive Latvian and Estonian governments have never managed to entertain long term normal political relations with Russia, because of various problems shortly presented in the introduction of this study. As a matter of fact, the external economic relations of Russia seem to be partially shaped by political concerns. Consequently, the political tensions with Estonia and Latvia, which have been prevailing over the best part of the post soviet period (from 1992 onward), partly explain the decreasing trends of economic relations between Russia and that part of its “near abroad”.

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Estonia and Latvia have been directly affected by various Russian trade discriminatory measures since the middle of the 1990s. Among these measures was the so-called double tariffs system which prevented these two countries from the status of the “Most Favored Nation”. This situation has seriously affected imports of Estonian and Latvian goods, such as foodstuffs, which suddenly became uncompetitive on the Russian market because of a twofold increase of duties supported by exported products. It has come to an end with the recent extension of the Partnership and Cooperation Agreement signed by EU and Russia. Before this extension, many companies in the Baltic countries had already successfully reoriented their exports to the West. Nevertheless, other companies, especially those located in the North Eastern part of Estonia, have not been able to do so. Some have disappeared. Some have been standing idle because of the loss of their Russian market. The double tariff system was accompanied by various non tariffs measures against Estonia and Latvia certain of which are still into force:

- Double toll control for goods on both sides of the border.

- Import ban imposed by Russia on goods requiring an Estonian phytocertificate from August 2004 to May 2005...

- Decision made by Moscow to raise the tariffs of railroad shipment towards Estonia, whereas the tariffs of freight transport to Russian ports remained lower for a large range of goods. This decision has automatically increased the competitiveness of Russian ports such as Saint-Petersburg, Ust-Luga, etc…

The shift of Baltic States’ economic structure since the outbreak of USSR also played a role in the decreasing trend of trade relations with Russia. During the Soviet period, in the frame of the planned economy, Baltic States had been specialized on the productions of goods needed mainly by Russia. That is why they became, among other specializations, a food and agricultural base oriented to the Russian “market”. Since then, the situation has changed. The dominating items of exports of the Baltic States have now little connection with the needs of Russian economy. In Estonia’s and Latvia’s exports, not any commodity creates 10 % or more of total exports in each commodity chapter. Lithuania is an exception because its economic structure much better matches the needs of Russian market (vehicles, transport equipment, machinery and equipment…). The evolution of transit trade flows through Estonia and Latvia. Since the beginning of the 18th century and the victory of Russia upon Sweden, the Baltic shore is a strategic interface between Russia and Europe. The Baltic ports (Tallinn, Riga, Klaipeda, Ventspils, Liepaja, Butinge…) have always been major outlets for Russian exported goods and gateways for Russian imports.

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Since the outbreak of USSR, the situation has changed. The political relations between Russia and its Baltic neighbours are quite bad, particularly because of the border issue which has not come to any definitive solution yet. And Russia, whose economy is more than ever based on the extraction and exports of raw materials, tries to diversify the corridors for its exports of oil and gas. That is why Russia has made major investments in the north western part of its territory where several new infrastructures have recently been built, especially the port of Primorsk. The recent signature of an agreement with Germany for the construction of a submarine gas line in the Baltic Sea is quite in line with this strategy. What is the actual situation of Estonia and Latvia in this particular political context? The evolution is not the same in Estonia, in Latvia and even in Lithuania. To sum up what follows, one can say that Latvia may suffer from a border effect with Russia and Belarus, whereas the role of Lithuania as a major transit place for Russia and Belarus is more and more obvious. Estonia may be progressively confirmed as a transit place for Russia in the future (as it is shown by recent Russian investments made in port facilities in Sillamae and Tallinn), although its political relations with Russia could be much better, but it still suffers from political decisions made by Russia. As it appears on the graph above, the situation of Latvia as a gateway to Russia and Belarus is more and more fragile. For instance, the flows of oil transiting from Russia or Belarus to the rest of the world by pipeline have undergone brutal changes several times in the 1992. They have undergone a rapid decrease after 2001 because of the decision made by Russia to send its crude oil directly to the Russian ports of the Baltic shore. In a way, Latvia’s territory and mainly the port of Ventspils have been short-circuited by this decision. This decision is also partly due to the bad relations between Russia and Latvia on several issues: the accession to NATO and EU, the would-be bad status of the Russian minority in Latvia, a major disagreement about the border between countries... As a consequence, Russia decided to stop the flow of crude oil going to Latvia. This caused a rapid decrease of the cargo traffic in the port of Ventspils (roughly one third) which is specialized in the transit of crude oil. Latvian government has tried to replace the transit of crude oil by pipeline with the transit of oil products by railway. But it has not compensated the loss of the Russian crude oil flows. Generally speaking, Latvia is less and less playing the role of an interface between Russia, Belarus and the rest of the world. It is particularly obvious in the case of Belarus. This country has imported almost nothing through the Latvian territory since the second part of the 1990s. Meanwhile, in Estonia, Latvia and Lithuania, the cargo transit traffic from and to the other Baltic States have regularly increased since 1999. It has even been stabilized at a very high level for Lithuania since 2000.

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Figure 24 : Evolution of transit traffic in Estonia and Latvia.

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The situation of Estonia is different. Its territory is used as a transit place mainly by Latvia, Finland and Sweden. The traffic coming from and going to Russia is relatively low and has even decreased during the 1990s. But, meanwhile, the transit of oil products by train has increased since the beginning of the outbreak of the USSR. It seems that the geographical situation of Estonia is a great subject of interest for Russian business. The Russian political power has bad relations with Estonia for the same reasons as with Latvia. But the growth of investment flows coming directly or indirectly from Russia in the sector of transports shows that the relations of Estonia with the Russian business are much better. Recently, the first part of the new part of the port of Sillamae, located near the border with Russia, has been opened to traffic. This infrastructure will be able to handle 10 million tons of goods a year. It has been financed by Estonian and Russian investors (50 % / 50 %), who are attracted here for several reasons: the location of the port; its free zone status; its connection to the Saint-Petersburg-Tallinn highway with new roads. Numbers of investments have been made by Russian investors in other ports of Estonia (Muuga, Tallinn). And, as it can be seen on the graph, the increase of the traffic of Tallinn’s port is in majority due to the increase of transit outbound traffic. That shows that Estonia is becoming anew a transit place for Russia and for other neighbour countries. According to transport specialists, is due to the following factors: the geographical proximity of Saint-Petersburg, which is richer and more industrialized than the Russian average, the good quality of transport infrastructures and mainly of railways, the high quality of services in the ports, the insufficiency of Russian port infrastructures in this region. Estonia is more likely than Latvia to take profit from these factors because of its proximity with Saint-Petersburg. Contrary to Latvia, the role of the Lithuanian territory as a transit place has dramatically increased both for Russia and Belarus. For Russia, it is due to the geographical situation of Kaliningrad and the necessity to keep as much as possible connected with this oblast separated from the rest of the Federation. Besides, Lithuania has become one of the major outlets for Belarussian exports of goods, together with Kaliningrad, because of its geographical proximity. As a conclusion, one can say that the role of Baltic States as transit places for exports and imports of Russia and Belarus has changed a lot since the outbreak of the USSR. While the transit traffic from and to other Baltic countries and other EU members has increased, the transit from and to CIS countries has decreased, except for Lithuania. For instance, Latvia is much more used as a transit place by Lithuania and Estonia than by Russia. There is a risk for Latvia to be marginalized. Besides, there is a growing competition between Baltic countries to attract transit traffics from and to former USSR. This traffic is economically very

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important for the transport sector represents around 7.5 and 9 % of the GDP in each Baltic country (in Latvia, transit transports represent around 10 % of the GDP according to various sources). In this context, the decision of Russia to stop its exports of crude oil through the Latvian territory can have serious consequences.

5.2 A strong barrier effect at the local level: the cooperation for the implementation of cross border projects is under developed.

Russia is involved together with Latvia and Estonia in transnational cooperation (Interreg III B) and in cross border cooperation programmes (Interreg III A Priority North and Priority South). For the period going from 2004 to 2006, 7.8 millions euros of Tacis funds have been allocated to the Russian and Belarusian Partners involved in the Interreg III programme. From this allocation, in the framework of Tacis 2004 Action Programmes, 1 million EUR has been made available to the Belarusian partner's participation in the South Priority projects and another 1 million EUR to Russian partner's participation in North Priority projects. The total amount of ERDF funding is 7.8 million euro s for Priority North and 10.4 million for Priority South.13 Russia and Belarus were not concerned by the first call for proposals but they participated to the following calls. The 2nd call for proposal for the Priority North took place between February 28 and April 18, 2005. In 9 of the received projects, 35 partners were from Latvia, 21 partners from Estonia and 5 partners from Russia. After the 2nd call for proposals, five projects were approved in the INTERREG IIIA North Priority (involving Russia and Estonia), by the Steering Committee (SC). Russia is involved in none of these projects which concern only Estonia and Latvia. That shows the lack of commitment of Russia in cross border cooperation with its neighbours until 2005. Nine projects were approved in the INTERREG IIIA South Priority, in June 2005 by the Steering Committee (SC). Belarus is involved in four proposals: - Development of cycling net in the Baltic Country of Lakes (development and marketing of 45 bicycle routes); - Developing cooperation among bordering Latvian, Lithuanian and Belarusian local administrations with an aim to define potential spheres of economic

13 All the paragraphs dedicated to the issue of cross border cooperation are partially based on meetings in Riga and Tallinn with various experts, mainly on long discussions with the members of the joint secretariat in Riga (especially with Ieva Kalniņa, head of Riga Office, whom I want to thank for her patience and her competency), and with members of the Estonian government (mainly Kadri Jushkin and Jaak Mandi, whose work is oriented towards the issue of the regional development in the Ministry of the Interior). Special thanks to Kadri Jushkin whose role is central to this part of the report and who accepted to provide us with precious informations, and explanations, about the mechanisms and current developments of the crossborder cooperation with Russia.

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development and define diversification possibilities for each of the involved cities in the region; - Conservation and sustainable management of biodiversity in Lake Druksiai which is a transboundary wetland complex of international importance (safeguard the biodiversity in the Lake Druksiai situated on Lithuanian- Belarusian border); - Improvement of financial management of import / export procedures in order to improve the financial management related to import / export procedures of small and medium sized enterprises located in border territories of Latvia, Lithuania and Belarus. The 3rd Call for Proposals for INTERREG IIIA Priority North, supporting cross-border cooperation between Estonia, Latvia and Russia, was launched on 5 September 2005. The steering committee met in January 2006 in order to discuss the submitted projects. Among 48 projects proposed for the Priority North, 16 were approved among which 9 with Russian partners. In the frame of Priority South, 36 applications were received by the steering committee and 15 were approved but only one with a Belarusian partner which is less than in the second call. The fourth call for proposals was launched on 27th February 2006 and closed on 2nd May 2006 for the Priorities North and South. Priority North is supported by 2.2 million euros for ERDF funding and roughly 3 million euros for Tacis action programme. As for the Priority South, the budget is 2.7 million euros from the ERDF funds and 0.8 euros from Tacis action programme. The fourth call shows a higher level of commitment of partner countries. One of the projects submitted has a Russian Lead Partner and 53 Russian partners are involved in various projects among the 31 submitted to the steering committee. As for the Priority South, 50 project applications were received. One had a Belarusian lead partner. And 36 Belarusian are involved in other projects. The Russian administration has long been reluctant to get firmly involved in cross boeder cooperation with Estonia. As an example, one can remind that the Federal Government signed the Tacis Financial Agreement Memorandum of the year 2004 only in June 2005. Consequently, the programmes of cross border cooperation implemented with Baltic States, which would support cross-border cooperation with Russia, worked only partially. That means that up to now, Russian partners were obliged to participate in the projects on their own financial resources. That seriously hampered the progress of cross border cooperation projects with Estonia. Thanks to the signature of the Financial Agreement in June, Tacis CBC funds could finally be transferred to INTERREG (now "Neighbourhood") programmes on the EU external border. That enabled the implementation of "genuine" joint projects with Russia. This is why Russia was

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able to take part to the third call for proposal under Priority North. Russia has not signed the memoranda for 2005 and 2006 yet. And if they finally happen to do so, it will be too late to work in close connection with the Estonian side because most of the Interreg programmes currently going on are committing their own fund at the moment and no ERDF fund will be left soon. By the way, the relations between the two states are pretty bad: in a recent seminar dedicated to cross border cooperation, organised by Putin’s administration representatives, Russia refused to deliver a visa to Estonian Minister of Foreign Affairs. The next memorandum (2005) does not include only cross border cooperation. It also includes Tacis national funds. If the memorandum is signed, Russia will be able to use these funds, but it seems that those dedicated to Tacis-CBC will not a priority to the Russia administration. As far as Belarus is concerned, the Lukashenko’s administration signed the Tacis financial agreement in December 2004. That means that the level of cooperation of this country has also remained very low up to 2005. But Belarus has been able to participate to the second call for proposals under the Priority South with real Tacis CBC funds. The principle failure of the crossborder cooperation is here. The preparation of Neighbourhood programmes went along very well in 2003-2004, in close co-operation with Russian regional administrations, and the programmes were ready to be launched in autumn 2004. But the signature from Russia was very long to come. So the Member States have actively used the ERDF part of the budgets to finance their parts of the projects. Meanwhile, the Russian partners generally wait their own financing for a long time. Perhaps the Tacis CBC money will be available too late, Russia only starting using Tacis when the Member States have already used most or all of the ERDF funds. One can say that there is no cooperation anyway, although the preconditions were very good. Somehow, the Russian Federal Government has apparently been hindering all the hard work the regional administrations did to elaborate these programmes. Russia and Belarus have participated to the autumn calls for proposals (3rd call) in the frame of the cooperation programme BSR IIIB, North IIIA and North IIIB. That maybe means that they have decided to get more involved in the conception of joint projects with their neighbours. But this apparent return of interest from Russian and Belarusian partners does not necessarily mean that Russian and Belarusian central authorities will fully support the implementation of future approved projects. In addition, since last couple of months, and gradually more, Russia and the Baltic States started to prepare in common for the next programme period (2007-2013). For a while, almost weekly, negotiations were going on with the European Commission over the draft Regulations for 2007. The regulations were hoped to be ready by autumn, in order to start the writing of new programmes. During this period, co-operation

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with Russia will be financed under the ENPI (European Neighbourhood and Partnership Instrument) regulation. But Estonia, as many other member States, is not at all satisfied with the Commission proposals. There are several crucial points in which Estonian authorities do not agree. They will be extensively presented and discussed in the final draft version. But the main problem for most member States is that they should, according to the Commission’s plans, take the full responsibility for all the programme funds, including funds spent in Russia. At the same time, Estonian and Latvian administrations know already now that they are not willing to take this responsibility, because Russia would never let e.g. Estonian auditors to come to Russia to check the spending of funds. On the other hand, they are not willing to trust Russian auditors as well, if they are bearing the responsibility. They want Russia itself to be responsible for all the wrongdoings, i.e. they have absolutely no intention to pay any funds back to the Commission from Estonian national budget just because Russian partners would have committed an irregularities or management mistakes. This is a very problematic subject and the initial optimism that cooperation with Russia would be much easier since 2007 has now vanished. If there is any cooperation at all, it would most probably be at least the same difficult. The low quality of the cross border cooperation with Belarus and Russia is also due to other causes: - A political problem: Russia has bad relations with Estonia and the profound disagreement about the border between the two countries hampers the possibility of cross border cooperation. Such a border disagreement has also been worsening the relations of Russian with Latvia for years. - Russia and Belarus are very centralized States: that means that it is quite difficult for regional authorities to get fully involved in the negotiation and the implementation of joint projects. They have no real autonomy to get in touch directly with local authorities of other countries (Pskov, Leningrad, Vitebsk and Grodno regions). They do not have financial resources either and they are fully dependent from the central authorities from this point of view. - There is a serious lack of administrative competency on both sides of the border for the conception of joint projects and for the application after calls for proposals. Maybe Leningrad oblast is more likely to develop these competencies thanks to its large population. But it will be more difficult in less populated districts such as the Eastern part of Latvia (Latgale), the Eastern part Estonia, Pskov and Vitebsk regions. - It is not that easy to carry out cross border cooperation projects along the external border of EU because the majority of the areas concerned are also relatively poor. That was a crucial point during the first call for proposals as Russian and Belarusian oblasts were obliged to get in CBC projects only on their

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own funds. And the problem was the same in the second call for Russian oblasts, deprived form Tacis CBC funds. For example, Pskov region (graph n°9) is one of the poorest of the North Western part of Russia, whose wealth is slightly inferior to that of the Federation (thanks to a few regions which possess oil resources). In addition, the north-western region of the Federation has lost a significant part of its population. One could say the same for the region of Vitebsk, which is the poorest in Belarus. This relatively under developed context hampers cross border cooperation projects for two main reasons: the lack of local financing possibilities and the lack of cooperation opportunities because of bad social and economic context presenting very few incentives for the conception of joint programmes of development. These regions are not attractive. Besides, the border regions of Russia, Belarus, Latvia and Estonia are not complementary on the economical point of view. Their economic structures are almost the same. Such a situation grounds more the conditions for competition than for cooperation.

Figure 25 : Annual income in North Western Russia in 2004, Evolution of gross product per inhabitant and Evolution of the population.

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- Such problems also exist on the Estonian and Latvian side of the border. The cross border cooperation is there hampered by a bad social and economic background characterized by the following features: low GDP and GDP per inhabitant which means a lack of local financing capacities; a regular and rapid decrease of the number of inhabitants since the 1990s, which causes a lack of local administrative capacities; a low personal real income, etc.

Map 14 : Gross Domestic Product of Latvian Districts in 2004

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Map 15 : Variation of Gross Domestic Product of Latvian Districts between 1996

and 2004).

As cross border cooperation with Belarus and Russia has been working only for roughly one year, it is hardy possible to draw the balance sheet of the implemented projects. According to the joint secretariat of Riga, the first evaluations will be available next spring. It will be then possible to see how things are going on. 5.1.1. DOES THE FRONTIER WITH RUSSIA HAVE A TERRITORIAL IMPACT ON

LATVIA AND ESTONIA?

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It is tempting to say that there is a direct relation between what has been presented above as a border effect and the relative backwardness of the Eastern regions of Estonia and Latvia. Especially in Estonia where the geographical pattern of development is now the opposite to what it was during the Soviet period. The region of Narva, for instance, located in North-Eastern Estonia, was much more developed than today. Indeed, in both countries, almost all the social and economic indicators are beneath the national averages in the eastern regions and the gap between most and less developed regions is still widening. The regional GDP, regional GDP / inhabitant and the real personal income are generally low and the unemployment rate is higher than the national average. Maps will be displayed in the final version of this case study. An accurate analysis of the cause of such regional disparities shows that the relation between the border and the local low level of development is not that obvious. Two short examples will be enough to highlight this idea. The district of Tartu is located in South-East Estonia along the border with Russia, near the lake Peipsi. This geographical situation could be considered as a burden, hampering every possible development. But one can empirically notice that it is not the case. In this county, the unemployment rate is much lower than the average

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Figure 26 : Evolution of regional economic indicators.

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Map 16 : Unemployment Rate of Estonia’s counties in 2004

Map 17 : Variation of unemployment rate of Estonia’s counties from 1997 to 2004

Besides, many other regions in Estonia and Latvia show a low level of development but they are not located in the eastern part of these countries. It is particularly obvious in Latvia where one can notice a decreasing trend in development indicators as one moves away in every direction from Riga. Nevertheless, these examples are not sufficient to prove that there is not any relation between the low level of development of these districts and their eastern location near the border. The border location is not enough to explain local social and economic evolutions but it certainly plays a role in these evolutions.

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Map 18 : Gross Domestic Product of Latvian Districts from 2000 to 2004 (annual average)

Before their accession to EU, Estonia and Latvia had already started to implement radical reforms of their economic structure, wiping away the soviet legacy rather rapidly. This process was extremely rapid in Estonia and began a bit later in Latvia. In the mean time, partly thanks to Association agreements signed with EU in the 1990s, Latvia and Estonia opened themselves to the West, attracting many foreign investments from EU and mainly from the countries surrounding the Baltic Sea. Both countries fastened onto Western Europe through their capital regions, that is Riga and Tallinn which are located in the western part of these territories. This « capital effect » is due to the higher attractiveness and accessibility of national metropolises. Capital regions, not only in the Baltic States but also in most of the post socialist CE countries, have been more able to attract investments thanks to various causes: numerous and well trained labour force, more diversified economic structure, higher quality and more numerous infrastructures, better accessibility, large demographical size providing labour force and consumers… Tallinn and Riga became rapidly parts of the European economic space. They integrated themselves in the Baltic urban network, establishing intense relations with Helsinki, Stockholm and other European metropolises. As it is shown on the maps n° 6, Tallinn realizes the major part of Estonian external trade and realizes the major part of Estonian GDP. This shows how much the prosperity and economic activity is concentrated far from the eastern border.

Map 19 : External Trade of Estonia’s Counties in 1993

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Map 20 : Gross Domestic Product of Estonia’s Regions in 2003

But until now, the rest of Latvian and Estonian territories have not really taken benefit from this “capital region effect”. Consequently, one can wonder about the role of Riga and Tallinn. Are they interfaces between their respective territories and the rest of the World? Are they « continental islands » taking benefit form their high insertion in the European urban archipelago but sailing away from the rest of their national background? In fact, according to Latvian and Estonian geographers, and officials of the Regional Development Department of the Ministry of the Interior in Tallinn, the low level of development of the eastern regions is partly due to a distance effect. Their backwardness is partly due to the distance between them and the capital regions. That explains why the western

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part of Latvia, far from the Russian and Belarusian border but also far from the capital, is under developed. Other factors have played a role in the regional disparities of development level, among which the choices made by national governments in the domain of regional development. For instance, from the beginning of the 1990s onward, Estonia has been ruled by liberal governments whose main subject of concern was the implementation, very successful, of a liberalisation programme based on quick structural reforms and attraction of foreign direct investments. Meanwhile, regional disparities have not really been attended to because that was not a priority. The interest for the regional issue emerged in Estonia only in the end of the 1990s, that is to say after 1997. Estonian authorities tried to handle this problem in creating in each region appropriate conditions and climate for business development. This political choice has not been really effective because efficient tools for regional development such as transport infrastructures (mainly railways) had been privatized, hampering the leverage power of governmental decision in this domain. Consequently, the gap between regional levels of development is still widening. Nevertheless, the border plays a role in the internal geography of Estonia and Latvia in some cases. In Estonia, the region of Narva is very much dependent from Russia. It is located on a major transport axis linking Russia to Estonia and Leningrad region to Tallinn. Besides, the local industries strongly depend from goods imported form Russia and from Russia as an export market. Consequently, local business needs an open border as much as possible. But the statistics displayed by the State office of statistics in Estonia show that Narva region is a secondary actor in Estonia’s foreign trade, as well as other Eastern districts (Jögeva Pölva), far behind the capital region (Harju county and Tallinn city) and behind Pärnu and Tartu counties.

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Map 21 : Roads and Railroads in Baltic States

During the soviet period, this region underwent an industrialization process as a part of the whole soviet economic system based on strong interrelations between Soviet republics and regions. Soviet authorities developed there industrial specializations which were mainly related to the needs of Russian and Soviet economies. The manufacturing companies of Narva region have not been able to set out efficient restructurations. The local economic structure, inherited from the Soviet large scale industry, is roughly the same as in the beginning of the 1990s, presenting a high share of manufacturing activities and a very low share for service activities in the regional GDP. In addition, the image of this region is bad for many investors (Tallinn attracts more than 81 % of the FDI inward stock in Estonia) because a various factors: bad environmental quality, high unemployment rate, problems related to the presence of the Russian minority, backwardness of local industries, lack of local capital, insufficiently skilled labour force… The proximity of Saint-Petersburg, whose development level is rather

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high compared to the Russian average, could be an advantage: presence of financial capital and high level service activities, large customer market… Besides, Narva could take benefit form its situation between Saint-Petersburg and Tallinn, as a transit territory. The border between Estonia and Russia still strongly hampers the growth of trade relations of Narva region because of non tariffs barriers, which were presented above, and also because of bottlenecks at the crossing points along the border. The bridge between Narva and Ivangorod is too small. In addition, trucks which go to Russia have to cross the city of Narva whose infrastructures are not sufficient to handle this daily massive influx. The Estonian national authorities have sent an official letter to the Russian central administration in order to propose the common financing of a second bridge over the river Narva which separates to two countries. They have not received any answer yet. In the same time, Finland and Russian governments have announced that they will venture to modernize the rails links between saint-Petersburg and Helsinki. The journey between the two cities will be cut from five hours and a half to three. The involved rail companies will not only modernize the rail infrastructures. They have also decided to speed up the border crossing procedures. It seems that the external relations with Russia are developing more rapidly than with the Baltic States in the transport issue. Meanwhile, there is still a strong barrier effect between Estonia and the nearest Russian region due to frequent traffic jams on both sides of the border. Figures given by various sources show that Estonia is not among the main trade partners of Northwest Russia for the exports of goods. And it rates only ninth for the imports. The modernization of transport infrastructures would enhance these exchanges. Such a modernization is necessary not only for Estonia but also for Russian companies because the Russian ports located on the Baltic shore between Finnish and Estonian border are not sufficient to handle the increase of Russia’s exports and imports. Recent investments in the Estonian port of Sillamae, located in Estonia 25 km from the border, shows that Estonia could take profit from this situation.

5.3 Policy orientations To have comprehensive view of the policy recommendations related to the Key Question Neighbourhood, it is necessary to refer to the Volume I. Here are presented only the recommendations directly connected to this case study. - To continue the dialog with Russian authorities, at the highest level, in order to conceive genuinely joint projects in the transport issues. The ports located on the 350 km long coast line around Saint-Petersburg are not enough to handle Russian imports and exports. For instance, the port of Ust-Luga is burdened by

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natural shortcomings, its sailing channel being not deep enough to handle large ships. Russia needs Baltic ports (especially Sillamae and Muuga in Estonia). But the bad quality of politic relations of Russia with its nearest western abroad has negative effects. It hampers the development of high quality crossing point of the border, whereas it would be necessary to modernize bottlenecks such as Narva and Koidula. Several months ago, Estonian authorities have sent to the Russian government an official proposition about the modernization of Narva-Ivangorod crossing point and about the construction of a new bridge. They have received absolutely no answer yet but the cargo volumes at the Ivangorod-Narva border checkpoint have jumped 33 percent just in the first five months of this year, according to local newspapers. And the traffic is expected increasing since Estonia has opened the port of Sillamae. - To negotiate with Russia in order to convince the government to lift non tariff barriers which still hamper the growth of external trade in that part of the neighbourhood. This would have a positive effect on regions whose economy is still much oriented towards the Russian market. - To maintain the effort towards the conception and implementation of real joint projects with Russia and Belarus. This effort may convince the central Russian authorities to move to a higher level of decentralisation. This is the only way to make the projects bases on Interreg III A initiative going on. Without any real autonomy, local governments of Pskov, Leningrad, Vitebsk, Grodno and Minsk are not able to cooperate directly with their Baltic counterparts. - To make an effort for the training of local authorities on both sides of the border. Local governments usually suffer from a lack of administrative capability for the conception, implementation and financing of joint cross border projects. - To determine very clearly the rules of the game about cross border cooperation. Baltic States authorities sometimes do not receive enough support from the European commission in this domain. That is to say that they feel somewhat isolated in front of Russia when they negotiate cross border projects. It is necessary to define more clearly each part’s task. Baltic authorities want to negotiate only the contents of the projects with Russia and Russian regions. All the rest must be left to European Commission. For instance, according to the future legal framework for cross border cooperation for the period 2007-2013, Estonian authorities will have to handle auditing, irregularities and even recovery of funds in case of wrongdoings on Russian side. According to the recently published regulations, if Estonia really happens to become the Managing / Paying authority, Estonian government will be obliged to perform control on the financial activities of Estonian and also on Russian partners. Estonia does not agree with that type of procedure and Russia is not likely to let any Estonian official come to Pskov or Leningrad oblasts in order to make financial controls. European Commission should first negotiate the distribution of responsibilities between all potential partners and then let them negotiate only the content of cross border projects.

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- To define more accurately the status and the amount of funds dedicated to cross border cooperation dedicated inside the future European and neighbourhood Partnership Instrument. Nothing clear has been said about this issue until now.

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REFERENCES

« Espace baltique. Isthme russo-européen ? (L’) », Courrier des pays de l'Est, n°1048, March April 2005, Paris, La Documentation française.

Estonia, Economist Intelligence Unit, Country Report, Country Profile, IMF, 2004.

Estonian Railways Ltd., Annual Report 2003. Estonian Statistics, Statistical Office of Estonia, monthly volumes, 2003 &

2004. Integration of Latvia’s Economy into the European Union, University of

Latvia, Human and Social Sciences, 2, 41, 2004, Riga. “Estonie : y a-t-il un pilote dans l’avion”, Courrier des Pays de l’Est, august

2005, n° 1050, pp 68-82. Fédération de Russie, Progrès et enjeux de la Réforme, Examens de

l’OCDE des politiques de l’investissement, Paris, OCDE, 2004. Fédération de Russie. Quel environnement pour l’investissement ? Lois,

politiques et institutions, Paris, OCDE, 2002. Lautso K., Venäläinen P., Lehto H., 2005, Transport connections between

EU and Russia. Current status and outlook for the future, Ministry of Transport and Communications of Finland.

“Lettonie : que personne ne décide pour nous”, Courrier des Pays de l’Est, juillet – août 2005, n° 1050, pp 101-115.

Monthly Bulletin of Latvian Statistics, Central Statistical Bureau of Latvia, 2003-2004.

Ojala L., Naula T., Hoffmann T., 2005, On a Fast Track to Economic Development, Trade and

Transport Facilitation Audit of the Baltic States, World Bank. Purju A., 2004, Foreign trade between the Baltic States and Russia: rends,

institutional settings and impact of the EU enlargement, Turku School of Economics and Business Administration, Pan European Institute.

Republic of Estonia, Economist Intelligence Unit, Country Report, Country Profile, IMF, 2004.

Transport Connections between EU and Russia, Current Status and Outlook to the Future, Ministry of Transport and Communications, Helsinki, 2005.

Transport Side, Estonian Statistical Office, annual publication, 2000, 2001, 2002, 2003 & 2004.

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6. HUNGARY – THE NEW BORDER OF THE EUROPEAN UNION

Györgyi Barta,

László Dancs Imre Nagy

Alexandra Szigeti Péter Strömpl

CRS HAS:

6.1 Introduction Hungary has common borders relations with seven countries: Austria, Slovakia and Slovenia are EU members while Slovakia, Slovenia and Romania joined NATO. Romania stands good chances of becoming an EU member in 2007. It is generally assumed that borders should not divide but unite, however Hungary shapes up its present neighbourhood policies in accordance with the realities of a still divided Europe. Different circumstances obtain at the regional level across soft or hard borders (depending on whether the neighbouring country belongs to the EU and/or NATO or not). The aim of this research is to examine the development of relationships between Hungary and two neighbouring countries (Romania and Serbia-Montenegro) after the fall of the communist regime (Figure 1).

Map 22 : Studied countries

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After 1989, Hungary’s two neighbours evolved in completely different directions. Impacting on these countries neighbourhood policies are elements such as: the international relations and perceptions, economic growth, the pace of progress made during the transition, inner social tensions, political, social, economic conditions, etc. Nevertheless, a number of similarities are to be found across the border regions of the three countries. First of all, large Hungarian minorities live in the areas close to the borders. Moreover, economic differences across the borders are less dramatic. These regions in particular as well as countries in general are characterized by a history of multicultural coexistence. The political system change had special relevance to the borderlands, as isolation could be brought to an end, borders became transparent and hence they could develop new connections with the rest of Europe. Hungary’s early EU accession created a novel situation. Once again, borders serve to separate Hungary from neighbouring non-EU countries, only temporarily in the case of Romania, but for a longer time in the case of Serbia-Montenegro. Bilateral relations between Hungary and Romania form the cornerstone of the stability in Eastern Europe. The relationship between the two countries suffers from a painful past, mainly due to the partly unresolved situation of the Hungarian minority. After 1989 this became a key issue in Hungarian foreign policy and a highly divisive, politicized and manipulated topic in Hungarian domestic politics. Right wing parties prefer to portray themselves, rightly or wrongly, as champions of the cause of Hungarian minorities (e.g. grievance for cultural autonomy for Hungarian minority in Romania, the so-called Status law, double citizenship, etc.). On the other hand, the parties constituting the actual liberal-socialist governing coalition tend to put the emphasis on the improvement of bilateral relations and the support of Romania’s accession to the EU, thus hoping that the situation of minorities would improve as a consequence of it. This policy line was given special emphasis at the meeting of the governments of the two countries, in October 2005 in Bucharest. Some voices went as far as to compare the importance of this joint session to the beginning of French-German reconciliation after World War II. Relations between Serbia-Montenegro and Hungary were not deeply influenced by minority conflicts (at least not after World War II). However, the Yugoslav war put an end to what had been a more or less peaceful relationship. Tensions have been sparked off in the beginning by the influx of Yugoslav (as well as Hungarian minority) refugees and later by drastic altering in the social and economic situation in Voivodina (where Hungarians primarily live). This has been mainly due to the massive Serbian immigration. As a result, political participation of

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Hungarian minority has been much more restricted. The new conflicts cast the shadow on current Hungarian-Serbian cooperation as well. We seek in this study to expose economic and social differences among the three countries both at the national level and in border regions. Consequently, we attempt to focus on the old and new elements of the emerging forms of integration, and the obvious consequences of EU membership of Hungary for its neighbourhood policies with Romania and Serbia –Montenegro.

6.2 Social and economic differences after 1990 Economic potential With 22 million inhabitants and a surface of 238 000km2, Romania is considered to be a large country both at regional level – compared to its other two neighbours – and at European level. Hungary and Serbia-Montenegro have similar size: Hungary counts 10 million inhabitants on 93 000 km2, whereas the 8,3 millions inhabitants of Serbia-Montenegro live on 91 000 km2. According to their economic capacity, Hungary finds itself in leading position: in 2003 the Romanian GDP reached 69% and the Serbian one 25% of Hungary’s value.

Economic development (GDP/capita) in Hungary reached in 2003 less than 55% of the European average (E-15), while in Romania 26 % and in Serbia-Montenegro 17% of it only. (Table 1. and Figure 2)

Table 19 : GDP/capita (Hungary = 100%)

Country 1998 1999 2000 2001 2002 2003

Romania 40,3 33,3 35,5 35,4 32,5 31,7

Serbia-M. 31,8 43,5 17,9 27,2 29,0 30,1 Source: Transition report 2004. European Bank for Reconstruction and Development, London, UK.

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Map 23 : GDP per capita in European countries

Data source: World Bank: World Development Indicators 2005.

Hungary’s relationship with the two neighbouring countries has been deeply influenced by the sharp economic differences existing between them. Despite their rapid growth (in 2001 and 2002 the growth of Hungarian GDP was 3,8 and 3,3%, while in Romania 5,3 and 4,9%, and in Serbia-Montenegro 5,5 and 4,0%), these economic differences remained at the same level. Differences are less visible in the border region (40–80% in favour of Hungary) compared with the three times differences of the countries’average (Figure 3.).

Map 24 : Regional differences in the GDP per capita of the three countries

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Employment and unemployment

The employment rate significantly decreased after 1989, affecting women in particular. The socialist inheritance – the high level of employment – has longer persisted in Romania and Serbia-Montenegro (much more than in other Southeast- European countries such as Italy, Greece or Turkey). At the same time, the employment rate has been following a downward path (Table 2).

Table 20 : Employment rate, 2001

Top

countries in

Europe

% Studied

countries

% Proportion

of women

%

Bottom

countries in

Europe

%

Sweden 78,4 Romania 62,2 46,2 Greece 48,7

Island 74,3 Serbia-M. 59,9 42,9 Turkey 48,7

Norway 73,3 Hungary 53,3 44,4 Italy 48,0 Source: Trends in Europe and North America – 2003, UN Economic Commission for Europe

Unemployment could not be analyzed in connection with employment partly due to the calculation method of unemployment registration and partly because of the unknown extend of the black economy. The unemployment level is relatively low particularly in Hungary but also in Romania. On the contrary, not only that the unemployment level is extremely high in Serbia-Montenegro but it has been continuously going upwards (Table 3).

Table 21 : Unemployment level in 2001

Top countries in

Europe

Unemp-

loymen

t rate

%

Studied

countries

Unemp-

loyment

rate %

Bottom

countries in

Europe

Unempl

oyment

rate %

Luxemburg 2,0 Hungary 5,7 Bosnia-H. 39,9

Island 2,3 Romania 6,6 Macedonia 30,5

Switzerland 2,6 Serbia-M. 27,9 Serbia-M. 27,9

Netherlands 2,7 Bulgaria 19,4

Slovakia 19,2

Poland 18,2 Source: Trends in Europe and North America – 2003, UN Economic Commission for Europe Competitiveness

Figure 27 : Competitiveness of European countries

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Source: Based on Lengyel, I. (2003) Verseny és területi fejlődés. (Competition and regional development). JATEPress, Szeged. p.357. (author’s own calculations) Notes: B: Belgium, DK: Denmark, D: Germany, GR: Greece, E: Spain, F: France, IRL: Ireland, I: Italy, L: Luxemburg, NL: Netherlands, A: Austria, P: Portugal, FIN: Finland, S: Sweden, GB: Great Britain, CZ: Czech Republic, EST: Estonia, H: Hungary, LT: Lithuania, LV: Latvia, PL: Poland, RO: Romania, SLO: Slovenia, SK: Slovakia, CY: Cyprus, M: Malta, BG: Bulgaria, SM: Serbia and Montenegro.

At the European Union level, countries’ competitiveness has been measured on the basis of employment rate and productivity. Figure 4. shows that the countries from Central and Southeastern Europe and Baltic area fill in the unfavorable bottom-left corner. The lowest productivity level is registered in Serbia-Montenegro, Romania, Latvia and Bulgaria while the lowest employment level can be found in Bulgaria, Poland, Hungary and Slovakia. Only Czech Republic and Slovenia could catch up with the countries from the European middle-group. Changing the economic structure

A strong correlation can be noticed between economic development and economic structure. In other words, in the countries where economic development (GDP/capita) is high, the proportion of the tertiary sector is also significant whereas that of the agriculture is generally low. There are nonetheless several exceptions: Malta, Greece and Latvia showed high tertiary proportion although their economic development is at a medium level. In Austria, Finland, Norway, Ireland the proportion of industry is extremely high. In Island agriculture plays an important role at present, too. However, our research

146

countries, Hungary, Romania and Serbia-Montenegro could not be included in to this „exception” group. (Table 4)

Table 22 : GDP and employment by major economic sectors, 1995 and 2001

1995 2001

Agriculture Industry Tertiary Agriculture Industry Tertiary

Hungary 6,8 (8)* 30,9 (33) 62,3 (59) 4,3 (6) 31,3 (34) 64,4 (59)

Romania 20,9 (40) 40,3 (31) 38,8 (29) 14,8 (43) 34,0 (26) 51,2 (31)

Serbia-M 19,3 (6) 37,8 (52) 42,9 (42) 21,1 (6) 32,1 (63) 46,8 (30) * the employment rates in brackets Source: Trends in Europe and North America – 2003, UN Economic Commission for Europe, p 174, 155.

Economic transition had a significant impact on Hungarian agriculture (before 1989 the agriculture gave almost 30% of GDP, and 20% of employment). At the same time industry has kept its importance. The present employment structure in Hungary shows some similarity with Austria, Finland, Ireland or Norway: low proportion of agriculture (1-4%), and relatively high proportion of industry (32-42%). As of Romania, the slow modernization process is translated into the large proportion of agriculture in country’s economy. It is however true that the contribution of the traditional industry (metallurgy, particularly) has significantly decreased. In Serbia-Montenegro the main tendencies are somehow opposite to the other two countries: the proportion of agriculture amongst GDP indicators and the employment in the industry sector have been growing while the importance of the tertiary sector has been decreasing. These trends can be explained by the unstable economy and the extremely high unemployment level. Infrastructural supply The main driving sectors of a modern economy are transports, telecommunication and informatics. We shall analyze these branches in the countries under research. Under state socialism, Hungary was on the last place at building infrastructure even among the COMECON countries (Figure 5).

Figure 28 : Telephone penetration in transition economies in 1989 and 1997.

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0

5

10

15

20

25

30

35

40

Sloven

ia

Croatia

Bulgari

a

Estonia

Czech R

epub

lic

Hunga

ryLatv

ia

Lithua

nia

Slovak

ia

Ukraine

Belorus

sia

Macedo

nia

Poland

Russia

Roman

ia

Source: World Telecommunications Development Report, ITU; and World Bank.

fixed

line

pen

etra

tion

rate

per

100

inha

bita

nts

1989

1997

During the transitional period, Hungary improved its position compared to its neighbours but it is still lagging behind the EU countries. Rapid progress has been made in infrastructure development (motorway building, railway modernization, infrastructure of telecommunication) following the EU accession.

Table 23 : The current situation (2001) and occurring changes in the infrastructural supply (%) from 1995 to 2001

Germany Ireland Sweden Hungary

2001

1995-

2001

%

Romania

2001

1995-

2001

%

Serbia-

M.

2001

1995-

2001

%

in 2001

Telephon* 374 10 183 6 229 3 635 485 739

Mobil* 498 64 172 175 187 187 683 729 790

PC* 85 17 32 19 23 10 336 359 507

Internet* 145 84 36 117 38 111 292 207 456

Cars* 244 – 139 – 161 – 534 361 455

Motorway(m)* 45 – 5 – 45 – 142 31 171 * pieces (or meter) per 1000 inhabitants Source: Own data compiled by using the database of Trends in Europe and North America – 2003, UN Economic Commission for Europe

A comparison between the three countries under study and the most developed or the most dynamic European countries has been drawn (Table 5).

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Consequently, it can be argued that the three countries are significantly backwarded as general differences between them and the chosen developed countries are 2-3 fold. The PC spreading is alarmingly lagging behind: the difference in the number of PCs per 1000 persons is 6-fold between Sweden and Hungary, and 22-fold between Sweden and Serbia-Montenegro. Amongst the three countries, Hungary enjoys the most favorable position, particularly in regard to the use of PCs and the Internet. Due to its high-pace infrastructural development during the socialist era, Serbia-Montenegro could preserve relatively good standards concerning the telephone supply and the length of motorways (per 1000 inhabitants). It can be generally concluded that the fastest rise was registered in the use of mobile telephony within the three countries. At the same time, the development of information technology was relative and very slow. . Social differences Infant mortality is a basic indicator of public health. If one draws a comparison between our research areas and the most developed European countries, one can distinguish among highly significant differences, even amongst these three countries. (Table 6)

Table 24 : Infant mortality in 2000

Infant mortality

rate (per 1000 live

birth)

Countries

< 4 Finland, Spain, Sweden, Iceland, Norway

5–10 Czech Republic, Croatia, Estonia, Hungary (9,2), Lithuania,

Poland, Slovakia, Slovenia

10–20 Albania, Bosnia-H., Bulgaria, Latvia, Romania (18,6), Serbia-

M. (13,3), Macedonia

36,6 Turkey Source: Trends in Europe and North America – 2003, UN Economic Commission for Europe, p. 191

As far as life expectancy is concerned, several similarities are to be noticed among the three countries – especially their serious lagging behind developed Europe. In the cases of the Baltic countries, Hungary and Romania, men formed “the club with the least hopes” in 2000 (Table 7).

149

Table 25 : Life expectancy at birth in 2000

Woman Men

Hungary 75,6 67,1

Romania 74,2 67,0

Serbia-Montenegro 75,1 70,3

Sweden 82,1 77,5

Italy 82,9 76,7

France 83,0 75,5 Source: Trends in Europe and North America – 2003, UN Economic Commission for Europe p. 187

During the last 10-15 years, tertiary education all over Europe was characterized by a dynamic increase of students’ number. Finland has been at the top of the European list (52 students per 1000 population) whereas Norway, Ireland, Estonia, Latvia, Poland and Slovenia belong to the „top group” as well (with more than 40 students per 1000 inhabitants). The above cited countries show that the fast absorption level in higher education has not been only a consequence of the country’s development level but also of political decisions. It is a fact that in Hungary (30 students/1000 capita) and Romania (24 students/ 1000 capita) the number of students tripled from 1990 to 2000. Nevertheless, the gap between these countries and the leading ones is still wide. Unfortunately, Serbia-Montenegro did not benefit from any increase during these 10 years (16students/1000 capita). Macroeconomic stability Foreign direct investments (FDI), inflation, current account and external debt have been chosen as indicators of the macroeconomic situation of the three countries.

Table 26 : Foreign direct investment (net inflows recorded in the balance of payments)

Countries

Cumulative FDI

inflows 1989–2003

in USD mln

Distribution among

CEB and SEE

countries* (%)

Cumulative FDI

inflows per capita

1989–2003

in USD mln

Hungary 33 641 18,8 3 364

Romania 10 536 5,9 486

Serbia-Montenegro 3 112 1,7 374

Source: IMF, central banks and EBRD

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The starting days of FDI were different in each of the three countries. Hungary initiated a massive privatization process immediately after the regime change, opening the biggest supply branches of the economy (except of the land and the banking sector) to foreign investors. In the first part of 1990s, Hungary was the leading host country in Eastern Europe. Between 1998 and 2002 Czech Republic and Poland experienced the golden years of privatization and of FDI, namely right after the end of the Hungarian privatization. Nowadays, Slovakia became an important host country for FDI. FDI penetrated the Romanian economy starting with 1997 while its top year was 2004. Nonetheless, foreign investors have not shown too big interest in Serbia-Montenegro’s economy so far. (Table 8) During the transformation years every post-socialist country has been hit by an extraordinarily high rate of inflation: in Hungary this happened between 1992 and 1996 with a rate of 23–28% (annual average retail/consumer price level). In Romania, 1993 was the „top” year, with 256% inflation rate; from 1997 on (155%), a continuous, downwards trend of inflation can be noticed. Because of the Yugoslav war, hyperinflation marked the beginning of the 1990s (9237% in 1991); after a period of oscillation, the radical decrease of inflation started in 2002. In 2003 the inflation rate was 15,4% in Romania, 11,2% in Serbia-Montenegro while in Hungary it went under 5%. As far as general government balance is concerned Hungary has shown some instability in 2003 when the budget deficit was 6,1%. This level remained high in 2005 too, in spite of the strict expectations of the EU. Romania and Serbia-Montenegro could control the governmental sector in a more effective way, thus pushing this indicator under 2% in Romania, and under 4% in Serbia-Montenegro. Between 2000 and 2003, the external debt remained the same in Serbia-Montenegro, while it increased by 50% in Romania and it doubled in Hungary. If one is to compare the external debt with the economic capacity, Serbia-Montenegro proves to be in serious financial crisis; meanwhile Hungarian debt has been more or less financed by important FDI. (Table 9)

Table 27 : External debt in 2003

Countries External debt in USD

million

External debt/GDP (%)

Hungary 40 157 62,3

Romania 11 588 34,6

Serbia-Montenegro 10 753 68,9

Source: Transitional Report 2004. EBRD p. 165, 173, 137

151

The progress in transition Since 1994, the European Bank for Reconstruction and Development elaborated some transition indicator scores in order to be able to formulate judgments about the country-specific progress in transition. The transition indicators are grouped into four main fields: enterprises, markets and trade, financial institutions and infrastructure. The indicators from 1 to 4+ represent little or no change from a rigid, centrally planned economy, whereas 4+ stand for standards of an industrialized market economy. The EBRD report also points at the private sector’s share in the GDP (Table 10). According to the present EBRD report (2005) Hungary leads the movement of transition among the post-socialist countries, Romania has important debts in the governance and enterprise restructuring, the competition policy and the securities markets. Serbia-Montenegro could show important progress only in the case of price liberalization.

Table 28 : Transition indicator scores, 2004

Indicators Hungary Romania Serbia-

Montenegro

Large-scale privatisation 4 4- 2+

Small-scale privatisation 4+ 4- 3+

Governance and enterprise restructuring 3+ 2 2

Price liberalisation 4+ 4+ 4

Trade and foreign exchange system 4+ 4+ 3+

Competition policy 3 2+ 1

Banking reform and interest rate

liberalisation

4 3 2+

Securities markets 4- 2 2

Infrastructure reform 4- 3+ 2

Total 34 28 21

Private sector share of GDP (%) 80 70 50

Source: Transition report – 2004. EBRD

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6.3 Political, social and economic relations between Romania and Hungary, Serbia and Hungary prior to Hungary’s accession to the EU

6.3.1. Cooperation forms between Hungary and Romania prior to Hungary’s accession to the EU Following the signing of the Trianon treaty at the end of the First World War, borders between Hungary and Romania had been redesigned and bilateral relations had been rather frozen throughout several decades. Only after the overthrow of the Ceausescu regime in 1989 did hopes for a normalization of relations flourish again. The difficulties arising from the transition to a market economy as well as the significant economic differences posed additional burden on the initiation of cooperation forms. The unfolding of cross-border cooperation has been hindered by the fact that the Hungarian regions in the vicinity of Romania are economically underdeveloped and have been particularly affected by the transitional changes. The social tensions foregrounding minority-related problems and nationalism intensified. However, strained relations between the two countries have progressively been left behind and bilateral relations at national, regional and local levels were enhanced in the last one and a half decades. Economic Relations Foreign trade between the two countries still registered a low turnover in the first period of the 1990s. Although the exchange of goods went upwards in the last decade, genuine prosperity could be felt only after 2000. In the years following 2000, imports and export figures steeply rose (Figure 6) so that the import-export turnover was three times higher by the end of 2004. Hungarian foreign trade has always had positive figures in relation to Romania. Hungarian exports primarily consist of electrical machines, vehicles, mineral fuel, medicaments and meat products. The accession to the EU had a negative impact on the exports of agricultural products to Romania, i.e. the export of cereals had been reduced with 70%. Aluminum and its derivatives, atomic reactors, boilers, machines and mechanical equipment, electric machines and accessories, clothing items form the bulk of imports of Romanian products.

Figure 29 : The evolution of Hungarian-Romanian foreign trade from 1989 to 2004

153

Source: KSH Notes: Magyar Export: Hungarian Export, Magyar import: Hungarian import, Egyenleg: Balance

Mutual capital investments unequally evolved. After the change of regime, Romania continued to be a preferred destination for Hungarian capital. Already in 1998, Hungarian capital investment in Romania overtook 61 million EUR. Even though capital export has been continuously increasing ever since, a real jump of more than 45% was made in 2001, while in 2003 growth registered almost 59% rise. Within 6 years the value of Hungarian investment in Romania became three times higher and in 2003 it rose above 165 million EUR. If other elements of corporate investment are also taken into account - credits, assets, securities and the capital market operations – only in the first half of 2005 the real value of Hungarian capital in Romania was more than 700 million EUR (Figure 7).

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Figure 30 : The evolution of Hungarian and Romanian mutual investment from 1998 to 2003

1998 1999 2000 2001 2002 2003

61,2 64,6 65,7

95,4

151,6165,9

0,1 4,2 5,4 7,0 6,9 12,20

20

40

60

80

100

120

140

160

180

Román befektetések Magyarországon

Magyar befektetések Romániában

mill

ió E

uro

Source: Figure compiled on the basis of the data provided by the Hungarian National Bank Notes: Román befektetések Magyarországon: Romanian investments in Hungary, Magyar befektetések Romániában: Hungarian investments in Romania.

Hungary is ranked only 14th among the countries with investments in Romania. However, in respect to the number of joint ventures created, Hungary fills in the 5th position. On the other hand, even though the value of Romanian investments in Hungary continues to go upwards too, Romania does not count as a significant investor in its neighbouring country (in 2003 the value of investment was 12,2 million EUR, meaning less than one tenth from the value of Hungarian investments in Romania). Industrial sectors (chemical industry/engineering) as well as the banking sector are mostly attractive for Hungarian investors. 30% of the Hungarian companies have investments in the Romanian heavy industry, whereas 16% of them flourish in the retail industry, 24% in the industrial sector and 14% in the services branch. Contrary to investments from other countries, Hungarian capital is primarily placed in the Romanian regions inhabited by Hungarians, namely in the four counties along the Romanian-Hungarian border (Szatmár, Bihar, Arad, Temes) and in the inner counties of Transylvania (Kolozs, Kovászna, Maros, Hargita). In addition, prominent Hungarian investments are directed towards the otherwise geographically isolated Bucharest. The presence of Hungarian investors is explained by the fact that Transylvania is among the more developed Romanian

155

regions, moreover, by the use of a common language and by prior investments made there. Investment in the farther regions is impeded by several factors such as: the low capacity of absorption, the unqualified labour force and the backward infrastructure. However, one has to note that Hungarian entrepreneurs investing in the areas near the border generally bring less capital value: the average size of their investment barely counts as a quarter of the non-Hungarian investments. These entrepreneurs are predominantly micro and small enterprises. Nevertheless, the major Hungarian businesses (OTP, MOL, TriGránit and Richter Gyógyszergyár, etc.) have also invested – mainly in Bucharest and in the larger towns from Transylvania (MOL Rt. is largely present in Bucharest and operates the petrol station in the Székely county). Romanian export of capital to Hungary has been mainly directed to Budapest. This trend can be mostly explained by the fact that the Eastern part of Hungary is economically underdeveloped and that there is not a significant Romanian minority over the border (namely it did not settle there because of the language difficulties). In addition, Romanian companies take Hungarian capital for a safe stepping stone in the direction of the EU or they choose to invest in the Western part of the country. Several assistance schemes have been designed under Hungarian – Romanian cross-border economic cooperation programs with the purpose of remedying the unfavorable status of the border region (euroregions, agencies of regional development, chambers, business development endowments, etc). With the exception of the PETROM investment started up in 1999, these attempts have had little success in the Southern plain so far. As earnings in Romania are significantly lower and living standards poorer than in Hungary, it is not surprising that the number of Hungarian citizens in possession of a Romanian work permit is not representative. On the contrary, the number of Romanian citizens working legally and illegally in Hungary is highly representative. On the basis of the number of work permits distributed to foreigners of different nationalities in the first half of 2002 it can be argued that most of the workers come from Romania, Ukraine and Slovakia (these ratios are still sound). The majority of comers originating from the neighbouring countries are of Hungarian nationality, thus not facing integration difficulties in the guest country (Figure 8). The number of foreigners officially in possession of work permits –thus not even the large number of Romanians - does not influence the dynamics of the labour market. If one takes into account both the figures of those officially unemployed and of those filling in vacancies their number is at an acceptable level. Greater problems arise from the fact that the period of time spent for performing seasonal work has an upward trend, however not in those areas where seasonal work would be needed indeed.

156

In a retrospective analysis, the great majority of foreign labour force has been seeking jobs in Budapest and Pest county, while only a fraction of the comers have found incentives to settle in the counties along the border with Romania (Figure 9). As the ratios on the figure show, they were not significantly modified in the last years, although smaller variations occur every season. As of figures effective on 30 June 2002, 41 972 work permits were released to foreigners. Out of these, 23 338 sought jobs in Budapest, some seven thousand in Pest county, whilst barely 300 worked in Borsod-Abaúj-Zemplénben county, 510 in Hajdú-Bihár and 530 in Szabolcs-Szatmár-Beregben county. Compared to the previous year, the regional differences slightly decreased, inasmuch as the share of the capital and Pest county did not rise any further. At the same time, the proportion of foreigners with work permits in the Southern and Western regions went upwards. In other words, this means that due to the lower wages on the Hungarian market, the high rate of unemployment and the scarce work opportunities, the Eastern region of Hungary will not be able to attract foreign workers in the future either.

Figure 31 : The distribution of Hungarian work permits on nationality criteria in the first half of 2002

Román60%

Ukrán13%

Szlovák6%

Jugoszláv2%

Lengyel 2%

EU tagállamok össz.6%

Egyéb európai országok

3%

Európán kívüli országok

8%

Source: Figure compiled by Balcsók I. on the basis of the data provided by the Labour Office Notes: Román: Romanian, Ukrán: Ukrainan, Szlovák: Slovakian, Jugoszláv: Yugoslavian, Lengyel: Polish, EU tagállamok össz.: EU total, Egyéb európai: Other European countries, Európán kívüli: Out of Europe.

Romanian citizens working on the Hungarian black labour market essentially get seasonal jobs in agriculture and constructions. There are no accurate data in connection with their status but it can be argued that a great deal of them work

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in compliance with the legal provisions. In many cases, illegal/black work is just a statutory concept. Sometimes the only way to respond quickly to the demands of entrepreneurs in exchange of modest rewards is to hire Romanian citizens ready to come to the small Hungarian settlements along the Romania-Hungarian border. It often happens that it is more advantageous to transport the group of illegal workers over the border in the required area for only half of the usually charged daily-work fee. This is explained by the fact that the accommodation cost for several days is still cheaper than hiring the services of Hungarian employees. In addition, guest workers on the black market are not interested in meeting all formal requirements in order to get a legal work permit. Generally, the usual procedures for getting a work permit can take up to two months and the related costs (for workers from abroad who anyway get lower incomes) amount to some 40 thousand forint (about 200 EUR). To sum up, even though the black market already seriously affects the regional labour market along the border with Romania, the rate of unemployment is still high in these areas. It could be therefore concluded that this phenomenon does not exert a significant influence so far.

Figure 32 : Distribution by counties of the effective number of work permits released to foreigners (31 December 1999.)

49,0%

19,4%

4,8% 4,2% 3,2% 2,7% 1,4% 1,7% 1,1% 1,3%

11,2%

0%

10%

20%

30%

40%

50%

60%

Budapest

Pest

Csongrád

Komárom-E

szter

gomFejé

rBéké

s

Hajdú-Bihar

Jász

-Nagyk

un-Szo

lnok

Szabolcs

-Sza

tmár-B

ereg

A többi m

egye

össze

sen

Source: Table compiled on the basis of the data provided by the Labour Office Note: distribution by counties; A többi megye összesen: other counties

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Migration It can be argued that migration tendencies are similar to the work patterns. That is to say that the number of Hungarian citizens settling in Romania is not at all representative, whereas for Romanian citizens Hungary is one of the cherished destinations. For years, the proportion of Romanian citizens in possession of residence permit has been the highest in comparison to other nationalities settling in Hungary. From 2002 to 2004 their number doubled, while their ratio systematically exceeds 60% (Figure 10). Accordingly, at the end of 2004 Romanian citizens were in possession of 55 723 immigration permits (58.9% from the total number released to foreign immigrants) and of 11 865 residence permits (68,4% from the total number of residence permits attributed to foreigners). Romanian citizens settling in Hungary are predominantly of Hungary nationality. Their migration is not merely justified by ethnic reasons but also by the encouraging economic prospects that re-settling entails. It is not easy to identify accurate data/trends from the distribution of Romanian immigrants in the Hungarian regions. However, on the basis of the distribution of work permits it can be argued that most of Romanians choose to settle primarily in Budapest and Pest county and in Western Hungary. Only a few prefer to reside in the regions along the Romanian border, nevertheless they still constitute more than half of those settling close to the border.

Figure 33 : The evolution of the residence permits’ number according to citizenship (2002–2004)

0

1000

2000

3000

4000

5000

6000

7000

2002 2003 2004

román ukrán szerb-montenegrói

kínai vietnámi orosz

amerikai egyéb

Source: The Office for Immigration and Citizenship Notes: roman: Romanian, ukrán: Ukrainan, szerb-montenegrói: Serbian, kínai: Chinese, vietnámi: Vietnamese, orosz: Russian, amerikai: American, egyéb: others

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Education The number of Romanian citizens coming to study in Hungary is also significant. They are solely Hungarian nationals from abroad and mainly graduating from higher education institutes. Unsurprisingly, as Hungarian is the language of instruction, they are not confronted with language problems. Many years of experience have shown that a great deal of these students do not go back to Romania, trying instead to settle themselves in Hungary. In the past years, out of the total number of Hungarian students from Romania enrolled in basic training only less than 10% pursued their studies in Hungary (the ratio of Hungarians from Ukraine approached 50%). From the perspective of Hungarian nationals outside the borders, training pursued in their country of origin is still very important, since certain special training programs are made available there in Hungarian and at an adequate level. At the same time, among 12913 foreign students enrolled in Hungarian institutes in the academic year 2003-2004, almost a quarter of them (3105 persons) came from Romania. The majority of Romanian students – similarly to students from other neighbouring countries – benefit from college and university training. Besides, the number of students from Romania enrolled in Hungarian PhD and DLA programs is more than half from the total number of foreigners. (Table 11)

Table 29 : The number of foreign students coming to Hungary from the neighbouring countries

Higher education

College level

University level

Further specialization

Phd, DLA Total Country

Number of students receiving training

Austria 1 14 8 5 4 32

Croatia 3 32 168 13 9 225

Romania 13 1 647 1 001 122 281 3 064

Serbia and Montenegro 0 601 469 8 17 1 095

Slovakia 5 1 223 1 115 37 67 2 447

Slovenia 0 14 18 1 2 35

Ukraine 5 662 437 10 58 1 172

Total no. of foreigners 28 5 016 7 049 240 580 12 913 Source: Table compiled on the basis of the data provided by the Ministry for Research

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Tourism Tourism between Romania and Hungary became an important sector. Most of the foreigners visiting Hungary are from Romania. In 2004, a fifth (6922 thousand people) from the total number of foreigners came from Romania, thus overtaking the visitors from Slovakia, Austria, Serbia and Montenegro, Germany, Ukraine and Croatia. Close to 80% from the total figure of tourists visiting Hungary in 2004 came from these six countries and Romania. From the number of Romanian visitors in Hungary, 71,5% came here only for one-day visit, 19% spent from one to three nights here, whereas 9,4% four or more nights. Altogether 8,7% from the amount of one-day visitors traveled for touristic purposes (leisure tourism14 – 385 thousand persons, business tourism15 – 48 thousand persons). The rest of visitors only passed through Hungary or they came to do shopping here. From the number of tourists spending more days in Hungary almost half came for tourism, however, among these the number of visitors in transit is still high (Figure 11).

Figure 34 : The number of Romanian visitors in Hungary according to their travel destinations

7,8%

44,3%

30,1% 59,6%

36,0% 10,0%

4,2%

1,0%

5,5%

1,5%

0% 20% 40% 60% 80% 100%

egynapos látogatók

többnapos látogatók

szabadidős turizmus üzleti turizmus vásárlás átutazás egyéb*

Source: Table according to KSH data Notes: többnapos látogatók: several-day-visitors, egynapos látogatók: one-day-visitors. Szabadidős turizmus: leisure toursm, üzleti turizmus: business tourism, vásárlás: shopping, átutazás: transit, egyéb: other

From examining the distribution of Romanian tourists visiting Hungary for several days according to tourist regions, it can be concluded that Budapest has been the

14 Leisure tourism: holiday; round trip; sightseeing; hiking; visiting relatives, friends, acquaintances; medical treatment; wellness treatment; taking part to cultural and sport events; hunting; religious purposes. 15 Business tourism: conference, congress; business trip; exhibition; market

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most preferred destination. Nevertheless, the South and Northern Great plain regions at the border with Romania receive a significant proportion of visitors (Figure 12). On the other hand, the per capita daily expenditures of Romanian one and several- days visitors are quite low. In 2004, the 4,8 thousand forint expenditures were significantly behind the average of 8,4 thousand forint of the other foreign visitors in Hungary. Romania is a preferred destination for Hungarian citizens, too. According to the figures, in 2004, on the second place after Austria, Romania received the highest number of Hungarian tourists (3286 persons). Nonetheless, this figure is less than half from the total number of Romanians coming to Hungary. The proportion of one-day visitors is 72,1%, out of which the majority certainly travelled to Romania for shopping and “petrol” tourism. Unfortunately, KSH does not provide detailed data on the motivations of travellers, but from experience it can be concluded that Hungarian tourists go to Romania for several-days visits for leisure tourism. First of all, they visit areas populated by ethnic Hungarians, especially places of interests and holiday resorts in Transylvania and the Székely region.

Figure 35 : The distribution of several-days visitors from Romania to Hungary according to touristic regions

Közép-Dunavidék; 4,2%

Dél-Dunántúl; 4,1%

Észak-Magyarország;

4,3%Tiszató; 5,4%

Nyugat-Dunántúl; 6,2%

Közép-Dunántúl; 7,2%

Balaton; 8,2%

Budapest; 27,1%Dél-Alföld; 21,2%

Észak-Alföld; 12,1%

Source: Own compilation on the basis of data provided by KSH

In addition to the above, Hungarian-Romanian relationships entail several other aspects, from cultural relations and twinning settlements to environmental cooperation. A series of treaties regulated the cross-border cooperation between

162

the two countries. Besides border control and patrolling agreements, a series of state treaties with direct impact on cross-border cooperation had been signed between Romania and Hungary. Among these, the Hungarian-Romanian Comprehensive Agreement (1997. yearly code XLIV.) is the most important, as it enforces the cooperation framework. The intergovernmental expert committees (i.e. the Committee concerning cooperation among minorities, the Committee concerning economic, trade and tourism - related cooperation, the Cross-border cooperation Committee respectively that for cooperation among local governments, the Committee for infrastructure, traffic, water and environmental management cooperation, etc.) set up in terms of the treaty the most important tasks. In other words, who is to work out and to monitor the cooperation between Hungary and Romania in “joint affairs”. Numerous bilateral comprehensive cooperation agreements have been and are enforced at the social economic level (i.e. the convention on multimodal forwarding of goods, the Hungarian-Romanian agreement on the protection of investments, diplomas issued by accredited research institutes, diplomas, official certificates and bilaterally recognized academic degrees, the Hungarian-Romanian cooperation agreement on privatization, etc). Among these, due to geographic conditions, the agreements on water management and environment protection receive special attention. Cross-border relations The fundamental framework has been defined on the grounds provided by the Hungarian – Romanian Border Rivers Convention signed in 1986 and by the Treaty on “Cooperation in regard to environmental protection” in effect from 2000. In addition, several agreements on water conservation have been enforced (i.e. the Agreement on the Flood Control, the Agreement regarding drainage, the Rule on the Exchange of Information, etc). In fact, the need for closer cooperation has arisen from the fact that the border line cuts in two the natural ecosystem (among which a great deal of ecological corridors) and that the two areas are connected through a network of surface – underground water systems (with numerous water flows across the border). Moreover, enhanced cooperation is justified by the existence of common surface and underground water supplies in the area, by the fact that the industry in the border region – especially on the Romanian side – is outdated and makes use of environmental-polluting technology. This entails high environmental risks, as for instance in the case of Tisza and its related tributaries which are regularly contaminated with cyanide and heavy metal residuals.

The establishment of euroregions in the 1990s as well as of new and smaller-sized euro-regional organizations and agencies significantly contributed to the

163

intensification of the cross-border relations. The Hungarian and Romanian counties along the border line share two large-scale, very diverse euroregions given their development and operational patterns: the Carpathians Euroregion and the Duna-Körös–Maros–Tisza Euroregion. The western part of the border line incorporates the Carpathians Euroregion – facing the Duna-Körös-Maros-Tisza Euroregion, in place from 1997 on. This has not been the result of a self-developing, “bottom-up” initiative but its framework has been enforced in connection with greater political objectives, in a “top-down manner”. The Carpathians Euroregion has a “multinational” character. Oversized historical-territorial-ethnical and other sort of problems prevent the large organizations from working efficiently there. Once this has been acknowledged by local actors, they came to realize that smaller-sized and hereby more efficient Euroregional organizations should be created. Two organizations at county level are already in place: the Interregion, formed at the border between Romania-Ukraine and Hungary and the Hajdú-Bihar-Bihor Euroregion respectively. Moreover, the Bihar-Bihor Euroregional Organization has come into being on the two sides of the border, as merger of the associations created by the inhabitants of the Bihar and Bihor regions. In addition, the agreements between settlements have a significant importance for cross-border relations. Among these, the most efficient framework in vue of daily, operational agreements is the twinning of cities (i.e. Nyíregyháza – Szatmárnémeti, Debrecen – Nagyvárad, Békéscsaba – Arad, Szeged – Temesvár). Many Hungarian settlements have a Romanian twin town. It can be nevertheless argued that these relations could essentially come into being due to the existence of Hungarian-Hungarian relationships. In other words, amongst Romanian settlements, the majority of partners are Hungarian. Consequently, we could distinguish among the cross-border relations on one hand those that render cooperation more operational and on the other hand most of the cultural relations existing between twin towns. Many Hungarian settlements are involved in such relations, whereas most of the Romanian towns participating in twinning projects are from the Székely region. Frequent and diverse relations develop between the inhabitants of the very border region in particular. With regard to the nature of cross – border relations with the neighbouring country, Romanian and Hungarian respondents have equally placed personal relations (visits of relatives, friends, and acquaintances) as the most frequent motivation. Furthermore, both parties have emphasized the frequency of resting and leisure – related as well as of shopping- driven motivations (Figure 13).

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Figure 36 : The nature of relations between the inhabitants of the settlements across the Hungarian-Romanian border (measured by their frequency)

0% 10% 20% 30% 40% 50% 60% 70% 80%

rokonlátogatás

barátok, ismerősök látogatása

pihenés, szabadság

bevásárlás

üzleti kapcsolat

munkavállalás

megélhetési kereskedelem

tanulás

egyéb

romániai átlag magyarországi átlag

Source: Data collected from a questionnaire-based survey, administered by Debrecen Institute of MTA RKK ATI Notes: egyéb: other, tanulás: education, megélhetési kereskedelem: smuggling (?), munkavállalás: work, üzleti kapcsolat: business relationship, bevásárlás: shopping, pihenés, szabadság: recreation, barátok, ismerősök látogatása: visiting friends and relatives, romániai átlag: Romanian average, magyarországi átlag: Hungarian average.

A development concept and programme, with particular relevance to the Hungarian-Romanian cross border relations, was designed in September 2000. Its priorities were revisited in 2003. According to the main document entitled The Development Concept and Program for the Hungarian-Romanian Cross-Border Region, its objectives are formulated at the county level. The counties concerned from the Hungarian side are Szabolcs-Szatmár-Bereg, Hajdú-Bihar, Békés and Csongrád, whereas from the Romanian side Satu Mare, Bihor, Arad and Timis counties are included in the programme. 6.3.2. Forms of Cooperation Between Hungary and Serbia–Montenegro Before the EU Accession The social and economic differences between Hungary and Serbia after 1990 are due to the different paths that systemic changes undertook. While Yugoslavia has been involved in a civil war (although a multi-party system has been also established there, the power was practically in the hand of the post-communist nationalists) Hungary started and - as the most relevant indicators show - completed the transition period to a market economy. . As argued in the previous chapter, Serbia-Montenegro and Voivodina have been completely ruined by the war. The economy continued to be in a shattered state after 2000 and development is very slow. Transition is an ongoing process; the

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country’s social, economic situation is not stabilized yet. Unemployment level remained high, inflationary effect is strong, corruption is overwhelming whilst politics and cohabitation of nationalities are poisoned by nationalism. In spite of their pre-war dynamism, the state of affairs in the border area with Hungary and Voivodina resembles this picture.

The economic situation of Voivodina

Similarly to the general situation in Serbia, Voivodina is characterized by slow economic growth rate (in 2002 it was 2%), high unemployment, outdated technology, low competitiveness level, non-transparent legal regulation system and stagnating industrial production. In 2001-2002, Voivodina’s economy was deeply confronted with stagnation in almost every economic sector. Import rates were higher than export ones and in August 2002 industrial production was less than half of the 1990 level. At the same time, territorial indicators are in many respects better than the indicators of Central-Serbia or the whole republic (Table 12):

Table 30 : Comparison of some economic indicators of Voivodina and Serbia

Voivodina Serbia Central-

Serbia16

2001-2002 industrial production growth

(%)

2,1 1,7 1,6

2001-2002 wholesale trade turnover

growth (%)

9,5 3,1 1,7

2002 per capita average real income

(dinars)

10 480 8 742 9 208

Source: Socio-Economic Trends, 2002, 9.

27% of the active population is unemployed in Voivodina. Since 2001 on, the unemployment level has been growing with 10% (there are 500 thousand employed and 270 thousand unemployed persons). Factory bankruptcies are also frequent nowadays. Employment is in many cases (according to the estimations in the case of 200 thousand employees) translated by a formal or a minimal salary. The post- civil-war influx of Serbian refugees exacerbated economic stagnation, generating further unemployment (in 1996 the unemployment level was below 20%). Thus, in this regard the situation is worse here than in the case of Central-Serbia or of the whole country. While in Voivodina there are 123 unemployed persons to 1000 inhabitants, in Serbia this value is 101 and in Central-Serbia is 93. 17 16 Without Voivodina and Kosovo Autonomous Regions 17 31 December 2001 data

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Cross border cooperation between Hungary and Serbia

Even though Voivodina is considered to be one of the most developed regions of Serbia, it is still quite backwarded in comparison to the areas at the Hungarian border. This area bears the ruinous consequences and aftermath of the civil war whereas in the southern Hungarian border area “only” signs of backwardness and very slow development are to be noticed.

Some words on the civil war period

During the civil war in the 1990s, fleeing ethnic Hungarians from Serbia, Serbs and other Yugoslav ethnic groups transferred significant wealth over the border, in Hungary. The number of Serbian enterprises has risen in the southern border region, strong migration processes have started, trade and other relations have been enhanced. Szeged became the central settlement of entrepreneurial capital investment. The refugees located their new enterprises near to the border, by this indicating their wish to return to the origin country. Only 15% of the capital investments were real, 85% of them consisted of fictive family enterprises with insignificantly subscribed capital.

Map 25 : Yugoslav enterprises in the settlements of the Southern Great Plains

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Wealth was transferred in the banks from Szeged at the end of the 1980s. Many people bought flats, which significantly pushed up flat prices in Szeged; others invested their capital in enterprises. During the 1993 immigration wave period, many enterprises came into being in the Bács-Kiskun County. In regard to Hungary‘s territory, the Szeged–Kecskemét–Budapest axis became especially attractive for investors (Figure 14).

After the war

At present, Hungarian entrepreneurs are highly reluctant to invest in Voivodina or in other Serbian territories. Since 2001, some 140-150 investments have been registered in Voivodina. Hungarian SMEs mainly opened branches there by establishing joint ventures with local partners. Hungarian firms often look there for work partners that could use the significantly cheaper Serbian labour. The presence of Hungarians in Voivodina is favorable to Hungarian investors as they represent cultural and information capital for them; their language skills and local knowledge facilitate the Hungarian intrusion into the Voivodina market. In the communities led by Hungarian local governments Hungarian firms can count on the local governments’ political support. Moreover, they enjoy certain economic benefits by cooperating with local Hungarian entrepreneurs (Figure 15).

Figure 37 : The situation of the Yugoslav enterprises in the counties of South Great Hungarian Plain (1996-1999)

Source: CD Céghírek (Firm news) 1996, 1999. Migration

0

1000

2000

3000

4000

1996 3209 2419 1052 47 2419

1999 3984 2767 956 67 2767

Magyarország

Dél-Alföld

Bács-Kiskun

Békés m .

Csongrád m .

168

Political tensions, fleeing away from the capital and family unifications18 significantly contributed to the migration processes. These processes have mainly been a feature of the first half of the 90s, however, they are still ongoing. Figure 16. illustrates migration processes in the first years of the new millennium, analyzed on the basis work permits, settlement permissions and the naturalization processes. The current share of immigrants from Serbia-Montenegro is significantly lower than in the 90s, yet there is a slightly growing tendency.

Figure 38 : The evolution of the residence permits’ number according to citizenship (2002–2004)

0

1000

2000

3000

4000

5000

6000

7000

2002 2003 2004

román ukrán szerb-montenegrói

kínai vietnámi orosz

amerikai egyéb

Source: Office of Immigration and Nationality, 2004

Notes: roman: Romanian, ukrán: Ukrainan, szerb-montenegrói: Serbian, kínai: Chinese, vietnámi: Vietnamese, orosz: Russian, amerikai: American, egyéb: others

Economic relations with Hungary

Yugoslav-Hungarian and cross-border economic relations had been very lively before the change of the system. During this period, the reclusive policy of the socialist countries was mitigated by the so-called “small border traffic”19, very prolific at the beginning of the ‘80s. In the trade sector, the department store cooperations20 were in favour of a higher export-import rate, and their primary aim was to diversify the product offer.

18 The male family members abroad aimed at family reunification. 19 The border area population’s freer traveling, border crossing were made possible by an interstate agreement. 20 It was not an accepted socialist solution; the corporations generally were not authorized to directly cooperate.

169

Under the cooperation framework of the food processing industry, Hungarian sugar beet and soy bean productions were also processed in Voivodina. In the ‘70s and ‘80s, cooperations were set up in the milk industry, meat industry, plant improvement and in the field of seed grain production. Moreover, relations between agrar experts supported the experience exchanges launched at the higher education level and in the seed grain producing institutions (Bácsalmás). Seed grain production and research carried out in the Agricultural Faculty of Újvidék University were opened to Hungarian producers until the mid-‘80s.

In other words, a dynamic division of labour remained in place until the beginning of the 90s. On the other hand, inter-institutional and interpersonal relations extensively developed. At that time, Yugoslav firms had better relations on the global market as technology and product development had been in place in Voivodina earlier than in Hungary. There was a significant rate of “shopping” tourism, but of real tourism too. Although in a quite formal way, the process of twinning settlements also started at the time. In addition, contacts were initiated and developed between economic organizations too.

The dynamic relations that had existed before the systemic change have been disrupted by the civil war when Yugoslavia disintegrated. As currently incurring sanctions, the small economy of Yougoslavia has been not able to establish significant economic and trade relations so far. These relations show an upward tendency only since 2000 on. But opportunities are open in the region; the “relations/connections” capital could be immediately activated under favorable circumstances (e.g. the Kunbaja producers buy the seed grains from the mentioned Újvidék research institution).

Since 15 August 1996, ambassadorial relations exist between Hungary and Serbia-Montenegro. There is an embassy and trade agency in Beograd and a foreign economy attaché in Subotica/Szabadka.

Several important bilateral agreements have been signed between the two countries:

– Total visa exemption agreement (27 April 1967); – The most favored nation status ensuring economic and trade agreement

(1996); – Agreement aiming the avoidance of the double taxing; Investment protection

agreement (20 May 2001); – Bilateral free trade agreement (7 March 2002)21.

Although bilateral trade relations were enhanced since Autumn 2000, no significant results could be registered. Moreover, the implementation of the free

21 Business2Hungary.yu, Hungarian Investment and Trade Development Agency Our bilateral economic relations,

http//www.business2hungary.hu/.

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trade agreement and of the so-called ‘six points economic package22’ is quite slow. The cooperation forms between the enterprise development foundations, firms, commerce and industry chambers, and by different exhibitions, fairs, business people meetings23 organized by the county and local governments contributed to the strengthening of cross-broder economic relations. In spite of the differences between the Hungarian and the Serbian Chambers, they can still significantly assist in the enlargement of direct corporate relations, in the mutual participation to exhibitions and fairs, in the organization of cross border business meetings and in the exchange of information.

The target areas of cooperation are commerce, wood industry, food processing industry, confection industry, furniture industry, and business consulting. As a result of cooperation, it is worth mentioning the setting up of the Cross Border Coordination Working Committee; it coordinates the work of regular chamber meetings, the mutual fair participation and the business meetings. Hungarian direct investment

Cooperation possibilities and expectations are much higher than the actual involvement of the Hungarian capital in the Serbian economy. In fact, the Serbian party suggested that the Hungarian government should send experts to the Serbian Ministry for Economy and Privatization, in order to promote participation to privatization programs24. An agreement was signed by the General Consul of Szabadka and the Economic Chamber of Zombor district, aiming at the higher participation of Hungarian investors to the privatizations in Voivodina. Accordingly, the Zombor economic chamber will provide on-line information regarding the district’s economic possibilities and the firms to be privatized25.

22 - free trade agreement - energy systems’ cooperation - SMEs credit guarantee based support - Building of the Budapest-Beograd motorway - participation in the reconstruction - tourism cooperation 23 East-West Expo, Farmer Expo International Agricultural and Food Processing Industry Professional

Exhibition, Csaba-Expo 24 Meetings on the Hungarian enterprises’ participation in the Serbian privatization Magyar Szó (Hungarian Word) 7 December 2002 25 Visa requirement and economic relations Magyar Szó (Hungarian Word) 7 December 2002

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Commerce

The free trade agreement between Hungary and Yugoslavia came into force on 1 July 2002. According to this agreement, Hungary contributes to the temporary insurance of certain, one-side advantages in connection with the elimination of customs; this is the first such agreement, when Hungary accepts certain asymmetry in the benefit of the other party. Concerning Yugoslavia, this is the first free trade agreement which was concluded in line with the norms of the World Trade Organization (WTO). The evolution26 of bilateral trade in the last two years is illustrated by Table 13.

Table 31 : The evolution of the bilateral trade 2001–2002

Year

Trade turnover (million USD)

Hungarian export into Yugoslavia (million USD)

Increase of the Hungarian export(The same period of the previous

year=100)

Hungarian import from Yugoslavia (million USD)

Increase of the Hungarian import(The same period of the previous

year =100)

2001 258,6 194,0 109,5 63,0 106,9

2002 350,0 224,5 115,0 66,8 120,6 Source: HCSO27 Foreign Trade, 2002. 12. 5/b Foreign trade turnover concerning the relatively important countries www.ksh.hu/pls/ksh/docs/hun

In 2001 Hungary was on the eighth place in regard to Yugoslav exports. As far as imports are concerned, it was on the fifth position, with significant Hungarian bilateral foreign trade surplus28. As for Hungarian export, the share of processed products is the largest, but food, beverages and tobacco are significant Hungarian export items too; Serbia-Montenegro mainly exports products processed in Hungary. Following the free trade agreement, the barter turnover between the two countries increased, thus reaching the pre-war level. It is difficult to objectively judge the role of the free trade agreement in the upswing of the foreign trade as the normalization of bilateral relations contributed to the development of trade independently from it. Contrary to the desired pace of bilateral relations, several unpleasant circumstances prevented potential Hungarian partners from initiating contacts. The cautiousness of Yugoslavia towards Hungarian entrepreneurs is justified because of the relaxed paying attitude, backed by the current state of the economy and the events of the

26 Concerning the relations with Hungary, the trade between the Voivodina and Hungary grew 18% between 2001 and 2002 due to the effect of the free trade agreement. 27 Hungarian Central Statistical Office 28 IMF, 78–79.

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previous years. The economy is characterized by mutual indebtedness of enterprises, no remedy has been found to it so far whereas it is only made more difficult by the restrictive financial policy. Cash or ready-made transactions dominate the foreign trade. Open transportation, delayed payment, application for product credit without bank deposits are not offered. The indebtedness, the lack of financial assets makes highly risky the collection of non-paid accounts, products and services. In case of a product bought in Serbia it is mandatory to avoid advance payment because of the “product elimination" risk. The collection of the expired claims via legal means is quite uncertain too. Due to the uncontrollable character of corporate transformations and financial channels, the payment of debt is questionable in the implementation phase as well. Transportation and technology discipline are insecure and unreliable, the custom procedure is slow and complicated and there are problems with the property registry (this latter is significantly better in Voivodina than in Central Serbia)29.

Education

During the 90s, but mainly since 1993, in the hope of a more secure education, high school pupils and university students went to study to Budapest, Szeged or other centers where it was possible to get specialized education (wood processing high school, horticultural high school, actor training high school). The education-driven migration reached its peak between 1992 and 1995, and another intense period was around 1999, during the Yugoslavia NATO attacks. However, die to the economic and politic difficulties, this process is still ongoing.

From Yugoslavia’s point of view, the unprecedented higher education relations have been established during the most difficult times of embargo. Although there is a symbolic and formal-like cooperation between Szeged University and the Natural Science Faculty of the Újvidék University, the Zenta - based distance education center at the Horticultural Engineering Faculty of Saint Stephen University is much more significant for practical reasons. Through this connection, 80 horticultural engineers from North-Bácska got degrees and remained in Voivodina! The local branch of the Technical College from Gábor Áron University similarly operates in Szabadka and recently a SZÁMALK local branch opened in Topolya.

As a result of cooperation in the higher education field, it could be mentioned that students from Hungary-based university and colleges could organize their summer training in Voivodina too, starting with the summer of 2000. The following table (Table 14.) refers to, amongst others, the 2005 share of the students arriving from Serbia.

29 Interview with András Pallos

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Table 32 : The number of the foreign students arriving from the neighbouring countries in every faculties (persons)

Higher

level

vocationa

l training

Colleges Universiti

es

Professio

nal

further

education

PhD, DLA Total Country name

Number of students

Austria 1 14 8 5 4 32

Croatia 3 32 168 13 9 225

Romania 13 1 647 1 001 122 281 3 064

Serbia-Montenegro 0 601 469 8 17 1 095

Slovakia 5 1 223 1 115 37 67 2 447

Slovenia 0 14 18 1 2 35

Ukraine 5 662 437 10 58 1 172

Total foreigners 28 5 016 7 049 240 580 12 913

Source: data of the Ministry of Education

There is a continuous health care migration from the Hungarian inhabited Voivodina areas, i.e. the Voivodina people travel to Szeged to get specialized private treatment.

Tourism

The former Hungarian inbound tourism from Serbia, which mainly meant the mass arrival of the Voivodina people to the Hungarian spas, the Lake Balaton, Budapest, completely collapsed (1992–93). This is due to the change of system and the transition to a market economy, following which prices increased and Serbian economy found itself in decline. Only “shopping” tourism reappeared after the Serbian change in 2000, however there is a slight increasing tendency in other tourism branches as well. Transit tourism stayed alive during the 90s whereas education tourism is also significant. The structure of visits underlines this fact as well. In the first part of 2005 the share of one-day stay (transit tourism) was 81% while the share of stays over 2-3 days was minimal. The number of nights that visitors spent (in the first half of 2005) was 47000, indicating a 13% increase in comparison with the same period of the previous year (Figure 17).

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Figure 39 : Number (thousands) of the arriving tourists from the neighbouring states

Source: HCSO

Water management and environmental protection Water management relations, re-opened in 1955, contributed to the development of more intensive and fair cooperation forms. The number of water management organizations engaged in cooperation programs went up. In fact, it is indispensable to ensure continuous cooperation in view of fulfilling the professional requirements (the effective flood control and catastrophe protection presumes cooperation). In the field of environmental protection, the Kiskunság National Park Directorate and the (Serbian) Voivodina Nature Protection Institute attempt to establish cross-border cooperation, with particular emphasis on concerted management of Szabadka forests and the Körös-ér Landscape Protection Area. Regional, settlement cooperation During the years after the change of system in Hungary, the Yugoslav-Hungarian cross border cooperation has been exclusively handled in the form of relations between settlements. This has been due to the absence of a proper “middle level” from the Yugoslav public administration. However, the local governments of Bács-Kiskun and Csongrád counties maintained relations with the Zombor and Szabadka municipal governments. Although these relations were restricted to a formal level during the 90s, they became more vivid in the context of regional cooperation carried out between Szabadka–Szeged and the Zombor–Baja regions. The Hungarian villages on the Serbian side (Ada, Becse, Bácstopolya, Magyarkanizsa, Zenta and newly Törökkanizsa) set up significant contacts as well. The twin-town relations between smaller settlements are more or less restricted to cultural and sport activities.

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The Voivodina Autonomous Region (VAR) is a member of the Danube–Körös–Maros–Tisa Euro region since 1997. Its greatest achievement was to assure full membership status for Szabadka city in this organization, in addition to the VAR membership.

In line with the Euroregion development strategy, closer cooperation of the region’s member counties is enhanced. However, this cooperation could be made more effective through developing communication strategies (border crossing points, public roads, regional information technology) and through European economic development methods (incubator houses, innovation centers, industrial parks). The reopening of the former Szeged–Temesvár–Kikinda railway as well as the assurance of the navigability on Béga and Temes Rivers are taken into account. In the context of the cross border regional development cooperation, in 2003 in Moravica an initiative was launched for the establishment of the Kunbaja–Bajmok Industrial Park and Logistical Center.

The readiness for cooperation is well proven by the existence of the border-related regional development concepts and strategies. Among the Hungarian documents there are direct references to this aspect e.g. in the South Great Hungarian Plain Regional Development Strategy, Csongrád County Regional Development Strategy30as well as from the Serbian side in the Serbian Land Use Plan31 and the Voivodina Economic Development Concept32. The Upper-Bácska and North-Voivodina Cooperation Program as well as the DKMT Euro region Development Strategy33 are made possible with the participation of both states’ experts. All documents underline the importance of cooperation, emphasizing the significance of traditional economic sectors’ (food processing industry, seed grain production and trade) and the new EU forms and opportunities for cooperation (industrial parks, establishment of incubator houses).

The success of cooperation is also acknowledged in the 80 PHARE CBC – where participants with small projects signed in , as in this case the fundamental application requirement was the involvement of Voivodina partners. All successful applicants had Zombor, Bajmok, Zenta-based partners. There were nearly 450 applicants for the 2005 Neighborhood Program applications (INTERREG III A - CARDS34). In spite of the relatively small amount (2 million EURO) available, the great responsiveness of applicants proves the viability of these renewed connections (economic, chamber, self government, and research institutes related fields).

30 MTA RKK ATI (Great Plain Research Institute of the Center of Regional Studies of the Hungarian Academy of Sciences) Békéscsaba Group , 2000 31 Prostorni Plan Srbije, 1996 32 GTZ, 2003 33 MTA RKK ATI Békéscsaba Group, 2005 34 CARDS-program – Community Assistance for Reconstruction, Development and Stabilization – It is related to Albania and the Yugoslav successor states

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6.4 How does Romania relate to Hungary after its accession to

the European Union? From 1 May 2004, Hungary became member of the European Union and thus the only neighbour of Romania with communitarian status. This paper discusses how Hungary’s accession to the EU affects relations between the two countries. Bilateral relations have always evolved against the backdrop of disputes concerning the situation of the large Hungarian minority in Romania. However, Hungary’s recent EU membership sets the traditional topics of this debate in a broader European context and raises new challenges. This paper argues that Hungary’s accession in the EU did impact the relationships between the two countries. Since 1 May 2004, the two post-communist countries addressed mutual problems not only from a strict neighbourhood perspective but mostly in the light of Hungary’s already EU membership and Romania’s candidacy respectively. My main argument is that the status differentiation (EU member vs. EU candidate) had a maturing effect on bilateral relations, in the sense that issues of common interest were approached with a higher degree of responsibility and European awareness. This status differentiation contributed at leaving behind past tensions and opening up new channels of dialogue and cooperation. At the same time, Romania could indirectly experience the immediate effects of the EU accession and acknowledge various changes that European integration brings about. Political developments: leaving behind conflicts of the past, focusing on future challenges Even though Romania and Hungary have been solidary in their efforts towards European integration in the past 15 years, the different perceptions of the status of the Hungarian minority living in the north-west part of Romania (Transylvania) generated sometimes critical moments in the bilateral relations. Soon after 1 May 2004, relations between the two countries witnessed a critical moment: Hungarian officials proposed that regional autonomy for Hungarians in Transylvania should become a pre-condition for Romania’s accession to the EU. Without having any direct impact on the rapports of Romania with the EU, the statement made a few eyebrows raise in Bucharest. Regional autonomy counts as the highest grievance of the Democratic Union of Hungarians from Romania (DUHR). Even though enlarged minority rights have been conceded in the last 15 years, successor Romanian governments failed to confer regional autonomy proper to Hungarians in Transylvania. In the light of this state of affairs, Romanian political class qualified Hungary’s usage of authority derived from the

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EU membership as a tactless interference in the internal affairs of an EU-candidate with a large Hungarian minority. Moreover, the declaration did not match the external policy line promoted by the Union itself. As the commissary for enlargement Olli Rhen repeatedly stated, to confer or not regional autonomy is a matter of domestic politics, to be solved internally by each member or candidate country (www.divers.ro, no. 40 (186) 4 November 2004, 26 (218)/7 July 2005; http://www.hatc.hu/editorspicks.php, www.bbc.co.uk/romanian ). Further burden has been put on bilateral relations in autumn 2004, when a referendum was called in Hungary on dual citizenship for Hungarians outside Hungary’s borders. The referendum held in December and soon after the Romanian general elections, provided ground for heated discussions both in Hungary and in Romania. The referendum was declared invalid due to low turnout. It nevertheless revealed a complicated anatomy of relationships between the two countries, in connection with the grievances and envisaged migration trends of Hungarians from Transylvania. As its representative, DUHR officially voiced the will of the Hungarian minority to enjoy double citizenship, thus having unrestricted access to the space and market of the European Union. On the other hand, as a major actor of Romanian domestic politics, DUHR is nevertheless aware that by supporting the dual citizenship it may jeopardize its own interests in the long run: if dual citizenship is enforced, a high number of Hungarians from Transylvania could relocate to Hungary/EU, therefore the electoral basin of DUHR could be seriously affected and the political stakes of the union endangered. While it still remains an open question, there is however reason to hope that despite these temporary setbacks, with the change of prime minister in Hungary and a newly elected government in Romania, relations will by and large continue to evolve in a positive, friendly manner. In early 2005, the recently appointed Hungarian prime minister stated in the course of bilateral talks held in Budapest that Romanian internal issues such as “regional autonomy” are to be exclusively addressed by UDMR, the official representative of Hungarian rights in Romania. In the course of several bilateral meetings held in 2005, both Hungarian and Romanian prime ministers called for European “compromise solutions” to matters of mutual interest and stated that both countries should primarily focus on a common future and leave the cumbersome legacy of the past behind.

Migration trends in Hungary and Romania after 1 May 2004 As its living standards have been approaching the Western ones, Hungary became an attractive target for work and residence. Moreover, the country is considered to be a “tampon zone”, an interface between the rich West and poor East. The Hungarian minority from Transylvania is the main pole of migrants from Romania to Hungary.

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In this regard, Endre Sik, director of the International Center for Research on Migration and Refugees argues that “with the exception of ethnic Hungarians from neighbouring countries, almost no one else speaks Hungarian and this is a sort of natural system of defense against economic migration” (http://www.bbc.co.uk/romanian/news/story/2005/05/050530_trailer_arena_dunare.shtml). The presence of Hungarian minority in general and the Hungarian minority from Romania in particular, in the overall migration towards Hungary is quite obvious if we consider the data disclosed by the Office of Immigration and Nationality of the Hungarian Ministry of Interior in respect to 2003. The number of foreigners having immigration permit to Hungary by 31 December 2003 was nearly 100 000. Nearly 60% of these permits (exactly 57 847) was issued to Romanian citizens (Király András, ‘Migration problems and minority rights in Europe’, Government Office for Hungarian Minorities Abroad,http://www.goethe.de/ms/buk/archiv/material/Migration/KiralyTheHungarianapproachFinal.doc). Mr. Egyed Zoltan, director of the Immigration Office of the Ministry for Domestic Affairs argues that 48 000 applications for residence visas were handed in only in 2004. Three quarters of these applications were also in connection to getting a work permit (BBC Romanian, http://www.bbc.co.uk/romanian/news/story/2005/05/050530_trailer_arena_dunare.shtml). As EU member, Hungary became in 2004 gateways to the world’s largest economic market and the rise in illegal migration on its eastern border was inevitable. For this reason, the European Union had thought reasonable to introduce careful and strict regimes for entering its territory to filter out ‘unwanted guests’ already from November 2003. Thus, as a preliminary step towards its integration in the EU in May 2004, Hungary adopted the Schengen border regulations in regard to Romanian citizens. Before this date, Romanian citizens could renew every month their staying in Hungary, fact which led to an exodus of Romanians seeking work and residence abroad, often through illegal means. Since November 2003, Romanian citizens are allowed to spend without a visa 90 days in 6 months on the territory of Hungary. Given the large Hungarian minority from Romania, the adoption of the EU border regulations created new challenges to be met. How could Hungary comply with the strict EU regulations concerning access to the EU territory and simultaneously follow its own priorities regarding the flux of Hungarians in and out of Hungary (Király András, ‘Migration problems and minority rights in Europe’, Government Office for Hungarian Minorities Abroad, http://www.goethe.de/ms/buk/archiv/material/Migration/KiralyTheHungarianapproachFinal.doc)? Hungarian minorities from abroad regard Hungary as their kin-state and are in favour of enjoying more subsequent privileges. On the other hand, as an EU member, Hungary has to enforce strict border regulations against

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illegal migration, which can often conflict with its identity-preserving policies towards Hungarians abroad.

The effects of enforcing the EU border regulations could be experienced without delay. The provisions mainly aimed at cutting down the number of illegal immigrants to Hungary and other EU countries by initiating more thorough control of passengers at the border, closer examination of the valid visas, a better tracking down system at the Romanian-Hungarian border control points. In fact, once Romania would reach full EU membership, it will become itself a “tampon zone” between the farther east and the west of the continent and will have to deal with the same frontier issues as Hungary at present. (Judit Juhász, “Hungary: Transit Country Between East and West”, at: http://www.migrationinformation.org/Profiles/display.cfm?id=181). On the other hand, these regulations made it harder for Hungarians outside Hungary to keep contacts with relatives and friends inside Hungary, as the number and duration of visits became more limited. In the long run, the newly enforced measures could entail some psychological effects of those ethnic Hungarians who feel that the door of possibilities is being closed in their face.

Consequently, Hungary made attempts to further shape its migration policy along the lines of EU requirements as an international obligation but at the same time not to destroy the network of manifold relations with Hungarians living outside its borders. For instance, in order to counterbalance the failure of the referendum on double citizenship, the Hungarian state introduced, effective from March 2005, “national visas” for citizens from neighboring countries, i.e. multiple entry visas for a period of 5 years. These visas are intended to help preserve the identity of ethnic Hungarians beyond the borders without however, automatically conceding to them the right to work in Hungary (BBC Romanian, 06 Ianuarie, 2005 - Published 16:46 GMT).

Enlarged regional cooperation within an European framework Intensified programs of regional cooperation and border management have been already envisaged by Hungary and Romania in accordance with general European policies. As previously argued, Hungary acts as a “buffer country” between the EU space and the non-EU countries. Its border with Romania became external frontier of the European Union and serves as a filter to prevent illegal immigration into the EU.

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Romania’s own capacity to ensure efficient border management is a key area of concern for the European Union, as the country aims at full membership in the bloc on 1 January 2007. When Romania joins the EU it will manage more than 1500 km of the enlarged Union’s external border and Brussels has interest in making sure that Romania could fulfil this role. “It should be able to prevent the illegal trade in goods and people, without erecting a new iron curtain between the EU and the countries which will be left outside the enlarged Union”, explains Jonathan Scheele, the European Commission’s chief negotiator in Bucharest (Story from BBC NEWS: http://news.bbc.co.uk/go/pr/fr/-/1/hi/world/europe/4110754.stm, Published: 2005/06/21, 15:35:19 GMT). In addition to being able to act as a filter against illegal migrants and products from countries such as Moldova and Ukraine towards the EU, Romania has also the duty to make sure that its own citizens do not abuse the right to free circulation within the Schengen space. In 2004, the border police managed to stop more than 1.5 million Romanians from traveling to the EU, but the filter is not perfect. One of the reasons is corruption among some border police, who is ready to accept money in return for turning a blind eye to irregularities in the travel papers of fellow Romanians. The Romanian border police chief argues that this is a “particular concern” on Romania’s western border with Hungary, now EU member. Such an incident caused by corruption and mere incompetence took place in March 2005, when several coaches with more than 200 Romanian citizens on board were refused entry to Spain, motivated by lack of valid travel documents. The Arad Border Police was found guilty, as it failed to check that passengers have valid passports, hotel bookings, return tickets and enough money for their journey. “Everybody is allowed to make a mistake once”, said European Commission’s chief negotiator in Bucharest. “But it shouldn’t happen again, because it would undermine confidence in Romania’s ability to control its border with Hungary, hence with the EU”. Should Romania not register considerable progress at the chapter of frontier security, its EU entry could be delayed with one year till 2008. However, progress has gradually been made and common strategies of border management as well as various projects of cross-border cooperation between Hungary and Romania have been launched. According to the Trans-Border Cooperation Program 2004, signed on 8 April 2005, the CBC program Romania-Hungary has a budget amounting to some 5 million EUR from PHARE funds and some 1.58 million EUR from Romania’s budget. The CBC programs incorporate Romania’s western and Hungary’s eastern parts. The funds are mainly being allocated for projects of infrastructure development between Romania and Hungary, promotion of tourism and environmental protection.

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Cooperation with Hungary in the environment field is now very efficient, and the bilateral relations are developing at a fast pace, Hungary's Minister of Environment and Water Miklos Persanyi said. "Environment protection has no boundaries. No country can have a clean environment, unless its neighbour is concerned with the same aspect. We depend on each other," the Minister added (Mediafax, http://www.roinfocentre.be/media_news_358.asp). Moreover, according to Magdolna Kalapati, Head of the South Great plain Regional Office of the National Agency for Regional Development in Hungary, 18 economic development and infrastructure projects will be financed within the framework of the PHARE CBC program (Bucharest Daily News, http://www.roinfocentre.be/media_news_224.asp) in the near future. Broader forms of future cooperation between the two countries are directly facilitated by the infrastructure projects carried out in the western part of Romania. Building at least one motorway that could link Romania to the major European traffic corridors is first priority for the country, given its speculated accession date to the EU in 2007. However, it has been a much disputed and politicized topic as to which route the motorway should cover and how should its building be financed. In the late ‘90s, on the occasion of the European Conference for setting the Pan-European transport corridors, Romania took the responsibility to build up the fourth Pan-European corridor, cutting its way from Romania’s western to the eastern border: Arad - Timisoara - Sibiu - Rimnicu-Vilcea - Pitesti - Bucuresti, Constanta. The project is to be financed from European structural funds, disposed through the European Investment Bank. Its works have actually started and some financing channels have been already activated. However, the Nastase government (2000-2004) decided to initiate works for a new motorway, cutting through the middle of Transilvania, from Brasov to Bors, at the expense of continuing works for the “IV Pan-European corridor”. This other motorway has a much better coverage of the region inhabited by Hungarians, hence its emphasis on the political agenda of the Democratic Union of Hungarians from Romania (DUHR). The motorway construction works were commissioned to the American company “Bechtel”. Two main objections were voiced in connection with this contract: apparently the project was commissioned to Bechtel in the absence of a public tender, and at odds with the interest of some European bidders; secondly, all construction costs are deducted from the state budget, which poses additional burdens on the Romanian tax-payers. The “Bechtel highway” was a constant topic of dispute in the electoral campaign of 2004. After the new government PNL-PD came into power, works have been stopped in the first months of 2005 and only 213 million EUR (instead of 500 million EUR) construction costs have been allocated from the state budget for

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2005.( stiri.acasa.ro, 30 May 2005, 09:59 am, „Doua variante pentru legatura cu Occidentul”). The incumbent government has clear-set objectives: “If Romania wants to pose in a serious country and the current government in a credible institution, then we need to respect certain European engagements” stated prime-minister Tariceanu (http://www.expres.ro, 11 July 2005, „Autostrada se muta de la Cluj la Sibiu”). At present, the works at the “IV European corridor” are given priority but the building up of the Bechtel highway will also continue, even though at a slower pace. To choose the routing of the motorway linking Romania to Europe is in fact a political decision. The topic stirred some debates within the current governing coalition. DUHR is unmistakably in favour of the “Bechtel” project, as developing the road system in the middle part of Transylvania, where most Hungarians live, is a necessity. Such a motorway would directly link Hungarian communities from there to Hungary and to EU further. Regional advantages are significant: it would be a clear incentive for Hungarian investors to startup new trades, relocate and intensify already existing businesses in the western part of Romania, inhabited by their co-ethnics. On the other hand, building up the motorway along the “IV European corridor” has its own advantages. The connection with European traffic corridors and international economic exchanges is anyway made through Hungary. Additionally, it seems that Hungary itself has plans to build a motorway up to Szeged - Nadlac, giving priority to the European corridor as well (www.cotidianul.ro, 29 May 2005). It follows from here that this route would connect not only the west of Romania with Hungary/EU but also the country’s south-eastern regions. It therefore provides stronger incentives for a larger category of European investors, interested in setting the foot in Romania, anywhere from Transylvania to the Black Sea. In other words, building the motorway in accordance with the IV corridor would enhance the economic attractiveness of Romanian regions both at a regional and wider European scale. Economic consequences of Hungary’s accession to the EU for Romania Hungary’s integration in the EU created important economic opportunities for Romania but also highlighted certain difficulties and threats having mainly to do with the implementation of common European market policies. During the period 2000-2004, Hungary’s business figures from trade with Romania amounts to 2.113,6 million dollars. Cars, electronic devices and high tech products are the bulk of Hungarian exports to Romania. In exchange,

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Hungary imports from its Eastern neighbour garment products and accessories, mechanical devices, paper, furniture, etc. (www.cotidianul.ro, 23 January 2005). An analysis regarding the regional distribution of foreign investments in Romania in the last 14 years shows that Hungarian investments had mainly been focused in the north-west and central part of the country. The Hungarian company MOL has been reported as the biggest investor in the area, with some 104 million dollars invested in the purchase of the petrol distribution company in Cluj/Kolozsvár. (http://webzter.ro/resurse_investitii_straine_prezentare_zonala.php). At the end of November 2004, the export of Hungarian capital to Romania summed to 345, 08 million dollars (the real value of investments amounted to 720 – 740 million dollars) through some 4.948 Hungarian functional companies. At the same time, it is worth mentioning the presence of Romanian capital in Hungary, summing up 50-55 million dollars through some 6 010 companies with Romanian capital. The largest Romanian investor is SN Petrom, with a social capital of 17 million dollars (www.cotidianul.ro, 23 January 2005). The increasing presence of Hungarian investments in Romania is directly related to the low wage costs in the country. The Economist Intelligence Unit shows in a study that wages in Romania are the lowest in the region (BBC Romanian, 30 November 2004, published 16:37 GMT). For instance, in the course of 2004, Romanian companies spent on average 0,95 dollars for one hour of work of an employee whereas 7,71 dollars were spent in Slovenia and 4,37 dollars in Hungary. Even though this affects the purchasing power of Romanians, it can also bring economic advantages to the country, the study shows. After 2004, when Hungary entered the EU, an increasing number of European companies which used to have their production plants in Hungary started thinking about ‘délocalisation’, that is shifting factories and jobs to the lower-wage economies of the non-EU members, such as Romania (“European Union Enlargement”, April 28th 2005/ From “The Economist” print edition). Another reason for which Western companies invest eastwards is the access to the local market. “Romania with its 23 million inhabitants and with wage costs under 1 dollar per hour is a very attractive target. Moreover, unlike its neighbours, such as Ukraine, the implementing of the pre-accession strategy to the EU considerably reduced the political risks”, it is argued in the study. Hungarian companies such as OTP, MOL and Gideon Richter had massively invested in Romania. For instance, OTP bought the bank RoBank, MOL is now the owner of Shell (a carburant distribution network), whereas Gideon Richter invested in a large research and development center in Tirgu Mures, in Transylvania. “Broader urban investments amounting to 1.2 billion USD are expected to be achieved through the construction of urban and commercial

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centers in the areas around Bucharest and Cluj in the next few years, as well as the enlargement of the RoBank network and investments in telecommunications”, stated János Halasz, director of the Romanian-Hungarian section of the trade development agency ITDH, (www.cotidianul.ro, 23 January 2005). Romania’s upcoming EU entry is a sound explanation why an increasing number of Hungarian businesses expand to Romania. The number of inquiries to the ITDH regarding investment opportunities in Romania went up by 80% last year (Vilaggazdasag, pp.1&2; Hungary Around the Clock, http://www.hatc.hu/editorspicks.php, 14 July 2005). Hungary is rated as the seventh largest investor in Romania, with over 5,100 companies in the country, of which 674 were registered last year alone. Hungarian businesses are most active in food processing, software development and auto spare parts. (http://www.hatc.hu/editorspicks.php). Hungarian companies are setting foot in the Romanian market by acquisitions and/or by setting up new subsidiaries in a bid to expand regionally, Halasz explained. This signals that many SMEs are financially sound enough to make the jump, he noted. Moreover, as already benefiting from EU development programs and financing schemes, a series of Hungarian SMEs have been involved in expertise and training programs for their Romanian homologues, in order to facilitate their integration in the European market (http://www.hatc.hu/editorspicks.php). After 1 May 2004, the price of basic products, especially sugar and oil, doubled in Hungary in line with the provisions of the common European market. This led to a massive import of sugar from the western part of Romania to Hungary. The imports determined Hungarian sugar producers to file complaints to the Hungarian Finance minister in Budapest asking for a solution to be worked out against this market disequilibrium (BBC Romanian, 14 July 2004 - Published 11:02 GMT). In exchange, following the same provisions of the common market, the wheat overproduction registered in 2004 in the new member countries of the EU (Hungary, Czech Republic, Poland) could pose a serious threat to the Romanian existing stock, considered to be the most expensive in Europe – the president of the Romanian National Association of Flour Milling and Baking Industries argues that while a tonne of wheat produced in the EU costs around 100 EUR, Romanian wheat is sold with 20-30 EUR more per tonne. (http://www.expres.ro/afaceri/?news_id=182664, 29 March 2005). In order to avoid a market collapse, the EU had to intervene by purchasing and transporting large quantities of cereals resulted from the wheat overproduction registered in Hungary, Poland, Czech Republic in 2004.

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It is said that at the beginning of 2005 the European Union had the largest stocks of cereals in the last ten years (http://www.expres.ro/afaceri/?news_id=182664,29 March 2005). Unlike in the EU countries where mechanisms of intervention in cases of overproduction are enforced and made use of, the non-EU countries face a high risk of massive imports of cereals at a very low price. There is reason to believe that although Romania signed an agreement with the EU based on which only 124.000 tonnes of wheat could be imported without customs tax in 2005, the actual imports could be even higher, due to cheaper, tax-inclusive prices (http://www.expres.ro/afaceri/?news_id=182664, 29 March 2005). At any rate, starting with 2007 – the envisaged date for Romania’s accession to the EU- Romanian producers will not enjoy any state support or subsidies in connection with the cereal production. Thus, they will have to enter in direct competition with other cereal producers from the EU member countries. However, the effects of Hungary’s accession to the EU were visible at the daily level too. Lower prices in Romania provided an incentive for Hungarian citizens to cross the border on a weekly basis seeking cheaper food, clothing and household products. As a result, so-called “border supermarkets” have mushroomed after Hungary’s accession. It was reported that the number of Hungarian citizens crossing the eastern border with Romania doubled since 1 May 2004 (www.capital.ro, 7 April 2005). (Figure 18., 19., 20)

A short summary After 1 May 2004, Romania has as neighbour at its Western border not only Hungary but the European Union itself. In the last one and a half years, the status differentiation in connection with the EU (Hungary – already EU member and Romania – still EU candidate) had a significant and positive impact on the bilateral relations at various levels. As an EU member, Hungary is in a position of supporting Romania’s expected accession to the EU in 2007 and of enhancing diverse forms of regional cooperation within an European framework. Paradoxically, as presently left out of the common European market, Romania became a more attractive target for European/Hungarian investors, interested in bringing capital and expertise in a country with cheap and qualified labour force and strong EU prospects. On the other hand, Romania could learn from Hungary’s experience how the EU membership and the implementation of common market policies impact the country at different levels.

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Map 26 : European transport corridors and the concession made to Romania: how the IV European corridor intersects Romania

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Map 27 : The IV corridor at present: motorway with „political detour” in Banat

Map 28 : Bechtel / Transylvania highway

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References

Balcsók István: A diplomásoktól a napszámosokig – külföldiek a „keleti végek” munkaerőpiacán. In: Határok és határmentiség az átalakuló Közép-Európában. Nemzetközi tudományos konferencia, 2002. szeptember 30. - október 1. Szerk.: Süli-Zakar I. Debrecen: DE Kossuth K, 2003. 160–167. p.

KSH: A nemzetközi idegenforgalom és a turisztikai kereslet jellemzői 2004. KSH Szolgáltatásstatisztikai főosztály Közlekedés- és Idegenforgalom-statisztika osztálya, Budapest, 2005. 29 p. www.ksh.hu

Belügyminisztérium Bevándorlási és Állampolgársági Hivatal (BM BÁH): Kiadványfüzet 2002-2004, http://www.bm-bah.hu/statisztikak.php

Oktatási Minisztérium: Statisztikai tájékoztató - Felsőoktatás 2003/2004. Budapest, 2005. 311 p. www.om.hu

Magyar Nemzeti Bank: Foreign Direct Investment Hungary, 1995-2003. 100 p. www.mnb.hu SAR Policy Brief No. 15, August 2005 http://www.goethe.de/ms/buk/archiv/material/Migration/KiralyTheHungarianapproachFinal.doc). http://www.migrationinformation.org/Profiles/display.cfm?id=181 http://news.bbc.co.uk/go/pr/fr/-/1/hi/world/europe/ http://www.hatc.hu/editorspicks.php www.economist.com http://www.expres.ro stiri.acasa.ro www.cotidianul.ro www.capital.ro http://www.expres.ro/afaceri/?news_id=182664 www.euractiv.ro www.divers.ro www.sar.ro / http://www.sar.org.ro/Policy%20memo15.pdf www.evenimentulzilei.ro www.adevarul.ro http://webzter.ro/resurse_investitii_straine_prezentare_zonala.php http://www.roinfocentre.be http://www.bbc.co.uk/romanian/news/story/2005/05/050530_trailer_arena_dunare.shtml) www.gazetadecluj.ro

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7. ROMANIA AS EASTERN BORDER OF THE EUROPEAN UNION

Octavian Groza Daniel Condorachi

Ionel Muntele Alexandru Rusu

Oana Stoleriu Georgiana Voicu

TIGRIS

7.1 Introduction

The aim of this study is to show the territorial and general features of the Romania’s evolution in the framework of the regional and global dynamics. It aims not only at determining the influence of the geographical location35, but also that of the geohistorical evolution, in defining those points of strength or weakness which influence the possible trajectories of the Romanian territory.

Our choice is justified by the following two considerations:

a) The location of a territory is the only stable element in its socio-political and cultural evolution. Consequently, the total inertia of the geographical position becomes the parameter which controls the place and the role played by that territory in a given combination of circumstances. The territory is rather the object than the subject of the forces which manifest themselves in particular socio-political circumstances. This corresponds to a large extent to the Romanian case. b) The geohistoric evolution of a territory derives directly from its geographic position. The long term global trends tend to induce a strong inertia and force that space to remain in a kind of geoecological niche which is hard to be abandoned. Thus, that “in between” location or in the close proximity of a core area imposes to the territory a extrovert behaviour, based on a continuous action or at least on immediate responses to internal or external stimuli. On the contrary, the location in peripheral areas or in those in contact with the great cultural areas imposes a rather reserved behaviour, a more reflective one, with rare moments of initiative and with long moments of inertia in front of the

35 The geographical position is considered here not only from its geo-mathemathic perspective (the location in accordance with the absolute and relative coordinates) but also from the socio-economic and cultural one (the location depending on the great cultural world’s area).

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internal or external stimuli. This second case better describes the evolution of the Romanian territory. These considerations generate a series of questions related to the Romanian integration in the European Union and to the impact of this process upon the neighbourhood policy: - What is the specific of the geographical position of Romania in the context of the past, present or future dynamics of the world’s driving forces? - What is the specific of the geohistorical evolution of Romania and what are the past, present and future consequences on its geopolitical behaviour? - What are the forces that influence the territorial dynamic of Romania and what are the probable consequences of these forces? - What are the important spatial scales for the study and understanding of these forces?

The first part of our research proposes a qualitative approach, followed by a evolution in the second part.

7.2 General Assumptions Our study is based on a series of assumptions considered to have a certain level of certainty. These assumptions set up the theoretical background of the research and they constitute working hypotheses. 7.2.1. The modern Romanian territory is much more an object than a subject of the history The modern evolution of Romania makes plausible the location of this state in a entre-deux space, a concept developed by professor Violette Rey of École Normale Supérieure LSH in Lyon: “…I understand this concept of d’entre deux space, as a space in which the external forces, being in competition, counts more that the internal forces in the process of constructing the territorial architecture, and in which the time stands under the sign of the adversity and of a eternal new beginning” (Rey, 2001, p.241). This concept is illustrated mostly evidently in the cases of Romania and Poland, two countries which were shaped and reshaped ceaselessly on long periods by external forces. The emergence and evolution of Romania were two historical processes strongly tributary to the main features of the European geostrategic scene in the past two centuries. The political and divergent interests of the Great Empires (Russian, Ottoman, Austrian-Hungarian) and then, that of the modern states (France,

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Great Britain, Germany, Russia, Hungary, Turkey) exerted extraordinary strong pressures over Romania. These pressures materialized especially through losses and regains of territory in a context of a relative diplomatic “isolation” on the European ground. Besides, the significant demographic size and the great surface of Romania, compared to the neighbours’, have enhanced the regional ambitions of Romania which politically and military took a part in the evolutions of Central Europe and the Balkans (military interventions in the Balkan wars, containment of the bolshevik revolution from Hungary, the alliance with Germany against Soviet Union). This regional role, encouraged by the Great powers, led Romania to the idea that it had to strengthen its position as a regional leader (visible after 1989) and to find a political niche in the interstitial spaces between the Great Powers. This fact came into sight during the communist period (the relative independence towards Moscow, the keeping of relations with Israel, the exportation of the socialist revolution towards the Third World) and goes in the present time. To be not only a political object shaped by the global forces but also a political subject limited in action to just some peripheral zones had some very important consequences: - Long lasting conflictual relations with neighbour countries. - The establishment of the very flexible, unstable and full of distrust political relationships with the Great Western (Western Europe) and Eastern (Russia) powers. - The conception of an external policy based on the increase of the political influence in Eastern and South-Eastern Europe and on efforts to turn itself into a buffer-space between the Great World Powers.

7.2.2. The Romanian territory experiences the implementation of a repeated modernity never ended The unification of the three principalities (Moldavia and Valahia in 1859 and Transylvania in 1918) brought on the European scene an important state in terms of surface and number of inhabitants, enjoying a very important geo-strategic position in the European context of the end of 19th century and of the beginning of the 20th century. This state was formed by three historical regions with their own different legacies connected to different cultural areas: the Central European one (Translvania), Eastern and Balkan ones (Moldavia and Valahia). These huge internal fractures proved dangerous in the political context of the past 150 years. The Romanian government found a solution, a normal one for that period, with a rapid and aggressive construction of a Romanian national identity and with an immediate import of modern Western European institutions and values.

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The creation of this national identity was built on European norms, between 1850-1950, with the exacerbation of an ethnic nationalism at the expense of a civic patriotism. Formed in a very rapid way, the Romanian national identity was confiscated by the communist regime and reinforced by the national communist identity. The extreme ideological manipulation and the cultural isolation, between 1950 and 1990, had two main consequences: the national identity underwent a decrease of its content and the alterity was impossible to be invented. The importation of western institutions and values was rapid. This led much more to imitation than to a real appropriation. The modern institutions (the state, the political parties, the Parliament) and the bourgeois values (art, fashion, architecture, social behaviors) were transplanted in a space characterized by an agrarian economy and a rural way of living (at the beginning of the 20th century over 80% of the population lived in villages). But the emergency of the construction of the national union has legitimated this fact. Moreover, it has even encouraged it (in arts and especially in literature was proposed for example the forms without content theory, which invited or even lured the artist to imitate the West, hoping that they will built a know-how which led finally to original creations). Even in these extreme and precarious conditions, the western modernity started to flourish: the democratic institutions started to work, the economy began to move toward industrialization and fine arts gave signs of originality. But the experience was suddenly interrupted by the inclusion of Romania in Moscow’s sphere of influence and by the importation of socialist modernity, which completely destroyed the incipient western European structures. Archipelago of places which took part to that western modernity (industrial regions in formation, urban regional networks which evolved naturally towards an urban and unitary system, the intellectual cores) was brutally replaced by the monolithic and standardized structure of a communist modernity. The failure of this model became obvious after 1990. It made possible the return of the post war one. This evolution of the modern elements places Romania in an entre-deux space and has a series of important consequences: - The confirmation of the territorial and institutional inertia in front of the changes because of a succession of repeated starts and unexpected and uselessly repeated stops. - The increasing risk of a superficial imitation of institutions and values imposed from the outside together with the undercover upholding of some conservatory and profound dimensions of the cultural local/regional structures. - The burdening of the invention of alterity. This caused some difficulties of communication with the outside at individual or collective level. It made more difficult the regularization the relationships with neighbour countries and the

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implementation of some policies promoted by the European Union (i.e. the self-governance of the national minorities). - The emphasis of the regional cleavages in the inner country (between cosmopolitan and ethnically “pure” regions, between the more extroverted and those conservative ones, etc.).

7.2.3. The Romanian territory is a space of invention and of promoting of negotiating territorial techniques The entre-deux position, extremely uncomfortable and burdened by visible negative dimensions in the context of modernity, reveals itself more and more as an advantage in the conditions of postmodernity. The flexibility, not only of the production techniques, the permeability of the frontiers, the growth of the human mobility, but also of the capital and of information, all these are phenomena which transform, reduce very much or even annihilate the great structures of the Western modernity. The fact that in Romania, these structures of the industrial age did not have the time to imprint themselves profoundly in the territory, sets free the assumption according to which its territory is a space in which territorial techniques of negotiation, able to combine the inertia of the territorial structures with the acceleration of the conjunctive structures, can be invented freely. The inter-ethnic relationships, the rural-urban, regional-national, regional-international, emigration-immigration, foreign and national policy are many processes and phenomena which seem to find original solutions in Romania. This idea will be more deeply demonstrated in the second version of our study case.

7.3 L'entre deux: Romania between West and East The construction of the Romanian modern territory is the clear expression of external forces’ action. The initial nucleus, the United Principality, was formed in 1859 with the support of France, in the context of a powerful territorial compression coming from the neighbour Empires (figure 1). The subsequent territorial losses or enlargements were also placed under the same sign of such external factors, that all the internal political and social projects had to take into consideration.

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Map 29 : The Romanian territory between 1850 and 1900

The historical evolution of the Romanian territory did not show only violence. The profound dynamics of this entre-deux space put into contact, for a long time, different cultural areas (figure 2), with consequences of an extraordinary importance. At the peripheries of the ethnic areas, the populations melt continuously, forming mosaic belts which allowed the occurrence of alterity and the peaceful and profitable coexistence of the inhabitants. Transylvania, especially south-western Romania (the Banat region) shows this kind of spaces, because the historical accidents which troubled Western Europe were unknown here (religious wars, for example).

At more fine and individual levels, cultural convergences came to reality as common structures which held myths, popular believes, similar gastronomies and music, close styles of living, etc. The setting up of the modern eastern states (1850-1920) caused the coming out of the national frontiers and the emergence of different national projects, founded on the Western European modernity pattern. The result was successful became very sensible in the places mostly closed to the core, that is Western Europe. Progressively, Romania found itself at the periphery of the European space and entered, as it was expected, the Russian area of influence, asserted at

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the end of the Second World War and laid down by theYalta Conference between the victorious powers.

Map 30 : Romania as cultural interface

The stopping of the west European modernity and its replacement by of the soviet one hurled the country into another periphery, that of Moscow. From Moscow towards the West, Romania was yet the most modern state, an obvious expression of the initial cultural western choice. This advantage which could have been transformed in a structure of resistance against of the soviet model was annihilated in 1965, when the process of getting out from the soviet influence, decided by the president Ceauşescu, became the beginning of a “modernity” in an original Romanian style. The complete failure of the latter left Romania weakened and bewildered after the outbreak of the communist coalition.

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The geographical analysis of the current situation shows that Romania lies it into the core of the potential relational field between East and West, in an entre-deux position, which would be qualified as the centre of the Euro-Asian peripheries.

Map 31 : Romania in the core of the Euro-Asian peripheries

From a demographic point of view, Romania stands at the crossroads of forces generated by the great amounts of population in the Central Europe, in Turkey and in Western CIS (Moscow/ Saint Petersburg, western part of Ukraine). Described by the interaction potential between the populations localized in the cities with more than 50,000 of inhabitants, these fields of forces represent, in fact, potential waves established between the three great demographic

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ensembles. In this case, Romania’s position would be a privileged one, because it potentially controls the major part of these waves. Unfortunately, the breaking up of the analysis through the introduction of the urban GDP, demonstrates that the force of attraction of the demographic ensembles decreases dramatically, except that of the Central-European. The situation would have been clearer, if the huge potential from the Pentagon had been taken into consideration. In the absence of the valorisation of its interface position, nothing remains to Romania but a single solution, namely that of asserting vehemently its position towards West, hoping that the economic welfare state of Russia, Ukraine and Turkey will considerably improve in the recent future.

Map 32 : The western tropism of the post-communist Romania

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Romania’s orientation towards West became obvious immediately after the collapse of the communist system in December 1989 (figure 4). In 1983, the external trade of the country was dominated by the COMECOM (83.6% from imports and 63.6% from exports). In 2004, the European Union provided 62.7% of Romanian imports and attracted 67.1% of Romanian exports. COMECOM (inclusively the former Soviet space and former Republic of Yugoslavia) does not hold more than 20.4% and respectively 10.6%. The same assumption is also valid for air and earthly transports, tourism, intercultural exchanges, investments and the infrastructure projects.

The oscillation between East and West, resulting from national decisions but strongly influenced from the exterior, seems to come off, once again, at the expense of the East. What does the instability of Romania’s trajectories mean?

7.3.1. Political consequences

Romania’s status as an entre-deux space compelled the involved parts to make difficult decisions and had depraved political consequences during its entire modern history. The western traditional allies had been many times obliged to betray Romania, if only through indifference (the Dictate of Vienna and the loss of Transylvania, the Yalta Conference). As well, Romania was forced to betray its allies, either chosen or imposed ones (Romanians turning back their arms against Wermacht’s soldiers, who were allies between 1941 and 1944; growing hostility towards Soviet Union). Such instability of the choices raised a wall of distrust between Romania and Euro-Asiatic states.

What kind of influence had this state of being after 1989? What will be the future behaviour of Romania? These are important questions in the context of the near accession of Romania to the European Union.

7.3.1.1. The long way of the European Union to Romania (and vice-versa)

The misunderstanding of Romania’s profound problems, the abominable mass-media manipulation in the December 1989 revolution and then the image of Romania in general, made the European Union extremely reserved concerning the wish and capacity of Romania to join it. The countless destructions provoked by the 40 years of communism and by the so-called Romanian “modernity” promoted by the Ceauşescu’s regime, overlapped the incomplete adoption of the

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western modernity during the inter-war period and offered less chances of rapid economic recovery.

Moreover, the political renewal after 1989 was made only at the ideological level, in a superficial way, because the politicians were in fact former activists of the secondary echelon of the Communist Party. The creation of the “historical parties” (which existed before the installation of the communist regime), respectively the National Peasant Party and the National Liberal Party, was rapid but inconsistent and immediately discredited by the power which was controlled by the former communists (the National Salvation Democratic Front, transformed later in a Social-Democrat Party of Romania and then in the present Social-Democrat Party).

Under these circumstances, the transformations imposed by the new regime (privatisation, restructuring, construction of the democratic institutions and of the market economy) generating social instability, were, at the beginning, less promoted by the non-communist political power, eager to consolidate their position by promoting some demagogical policies in order to guarantee the popular support.

The refusal manifested by the European Union in the first years after 1989 did nothing but to enhance these tendencies and to induce an acute feeling of frustration and isolation among the Romanian population. This fact (the emergence of a negative image of the European Union because of errors of communication) must be kept in mind by the officials from Brussels with view to the enlargement process.

It is not an astonishing fact that, in terms of foreign policy, Romania found its whereabouts, initially, towards Russia, with which the president Iliescu signed in 1991, just before the implosion of the ex-Soviet Union, the first international post-communist treaty. Immediately after that, in the period when the former Soviet Republics regained their independence, in spite of a popular unfavourable opinion, Romania hurried to recognize the independence of the Moldavian Republic. It can be interpreted as a gesture to guarantee its security on its Eastern flank. But this fact made difficult an eventual union with the Moldavian Republic with Romania, by complicating the situation along the future eastern border of the European Union. The connections/relations established afterwards with Ukraine in order to control the armed conflict between Moldavian Republic and Transnistria completed what could be considered as the first international political axis of the post-communist Romania.

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Map 33 : The search of an international affirmation and national security

The classical threat represented by Russia, stiff deeply in the unconsciousness of the Romanians, caused this political behaviour, but also permitted a very active and ardent searching of an ally, so as to counteract the eventual hostile actions of Moscow. Thus, all these efforts were directed towards the integration in NATO, which manifested a clear tendency of extension to the East. The popular adhesion to this project was larger and more obvious than that to the European Union, whose image remained confused and who seemed to raise conditions for a doubtful and distant result. In other respects, the population has always been disturbed by a visible overlapping between the two organizations (NATO = European Union type). Thus, although the negotiations with EU had almost started, the emergency of the national security issue made that president Constantinescu explicitly closer to the foreign policy of the United States of America than that of the European Union. The proof is the authorization/agreement of for the passage of American aircrafts, over the Romanian territory, which dive-bombed the Serbian territory, despite of the opposition of Brussels. In addition, the opacity and uncertainty proved by the European Union about the future of the country broke out the slight desires of regional leader of Romania and allowed president Constantinescu to give priority to the Bucharest-Ankara-Tel Aviv political axis, which signified less a movement towards Turkey or Israel than a rapprochement with USA. A second element appears which must be taken into account by the European Union in its relations with the neighbours, even without a continuation of the enlargement process: as long as EU cannot offer itself security guaranties, it must pay more attention to the national priorities of the neighbour countries.

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The return to power in 2000 of the president Iliescu and of the Social-Democratic Party brought an equilibrium in the priorities between NATO (in fact the USA) and the European Union. Despite all these facts, Romania (and Poland, in a similar entre-deux situation) decided to move closer to the positions of the United States, supporting them in the Iraki conflict, sending also troops, in spite of the protests of Brussels. In this context, a declaration of the European Union, according to which Bulgaria could access to the Union before Romania, sharpened the tensions between the two candidate countries and generated an unhealthy competition between Romanians and Bulgarians. In order to limit these tensions, the Prime ministers of both countries decided to set out an official tandem: together inside or outside the EU. We can highlight here another idea. The strategy promoted by the European Union of creating a competition between the different candidate states can generate popular undesirable attitudes and can reactivate older conflicts (as it happened between Czech Republic and Slovakia, between Slovakia and Hungary, between Hungary and Romania, etc….). The official accession to NATO and the end of the negotiations with the European Union (2004) let the president Băsescu, and the centre-right alliance who reached the power, enjoy a calmer foreign policy. In spite of this, the small blackmail related to the Unites States offered a new mean to answer to the pressures exerted by Brussels: in December 2004, the president Băsescu indicated that the essential axis of the Romanian foreign policy was between Bucharest, London and Washington. His speech was more temperate during his visit to Paris in November 2005, where he indicated another possible axis, between Bucharest, Berlin and Paris…But just on the 6th of December, the American United States secretary, Condoleezza Rice, coming from Poland where she had done the same thing, was signing at Bucharest the agreement through which Romania accepted the presence of American military base on its territory. This fact did not generate objections from Brussels, but Moscow strongly reacted, declaring however that “…it won’t get even to another cold war”. For Romania, this fact means the growth of the tensions with Russia. Romania had already begun to be bitterer since Russia cut its electric energy supplies to the Moldavian Republic, and its pro-European views became stronger and stronger. Romania replied and immediately cancelled a project of connection of its own electrical networks with that of Moldova in order to supply its neighbour with Romanian electricity, a fact that couldn’t be accepted too easily by Russia, especially since the president Băsescu, being into visit through Georgia, declared that Moscow wanted to turn the Black Sea into a Russian lake.

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The affirmation of this obvious pro west attitude and that of a moderate critical attitude towards Russia reveals that Romania engaged with all its confidence in the refoundation of the Western European values and that it expected it to be a way with no return. 7.3.2. Territorial consequences

The functioning of entre-deux spaces points out a series of processes and phenomena hard to find in other places. Forced to evolve in a context of unstable equilibrium, to lead or to be led by circumstantial tropisms, these spaces tend to become spaces of discovering of some structures and resisting behaviours, incorporated in the territorial architectures by which they to mould them in a subtle way. The specific of the migratory phenomenon from the Central and Eastern Europe is just an example in this sense. The collapse of the communist regime and then the process of the European Union enlargement increased the fear of a massive invasion of the Eastern Europeans in the Western Europe. This fact did not happen or, if it happened, was just a circumstance and was due to some unpredictable causes (the shock therapy in the economy of Poland, the conflicts in the Western Balkans). Just after a couple of years, the migration flows to the EU decreased significantly (in favour of other destinations such as USA, Canada, New Zealand and Australia), replaced by circulatory migrations characterized by the recurrence or the periodical leaving of the migrant. What is more interesting is the fact that the phenomenon started to develop also between the CEE countries and those from the former soviet space (Ukrainians in Poland, Moldavians and Ukrainians in Romania, Russians - of Bulgarian origin - in Bulgaria…). Another fear of the Occident was the fact that the Eastern countries could become large gateways to the European Union for the poor populations coming from Africa and Asia. Neither this fact became a reality, although there is a transit flow of illegal migrants through the territories of the CEE countries. More important are the definitive migrations from Asia (and to a lesser extent from Africa) to the new member or candidate countries. Thus, the Czech Republic, Hungary, Poland, Bulgaria and Romania tend to become destination countries for the migrants from who come from Eastern Asia (especially China) or from the Middle East (figure 6). These migrants have established or opened some sort of business in the CEE countries and they are getting more and more integrated in their new country of residence.

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Map 34 : Migrations and welfare gradient in Central-east Europe

This confirms the fact that the Central and East European space presents dual features. It functions in the same time as a periphery, as well as a core area. Out of the classical nucleus’ proximity, that is the European Union, the explanation can also derive from the particular territorial organization of the states concerned, due to their geographical position and their geohistorical evolution. Thus, the study of the Central and East European countries sets off a certain type of territorial and curious regularity and namely a double gradient of development (of modernity?), at the national and infranational level. In other words, the parameters of the gradient decreases from west to east, not only from a country to another, but also inside the country, from the western regions to the eastern ones (figure 6). From state to state, the decrease of the welfare level can be explained by the increase of the distance from the generating and promoting centre of modernity. At the infranational level, things seem to be not that simple. In the first case, the functioning of the state institutions proves to be an explicit and satisfactory factor. All the modern states in Central and Eastern Europe are recently born states, of which the actual territorial shape was an outcome of the First World War. The replacement of the imperial or royal structures by modern state was achieved in a short period of time. The quality and depth of such a shift was directly proportional to the distance from the emitting centres of the west-European modernity and inversely proportional the distance from Eurasian centres of power. At the infra-national level the explanation can not be the same. The great distance from the European West and the decisive influence of the Ottoman

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Empire, or that of the Russian Empire, can maybe explain the situation of regions located in eastern Poland and southern Romanian. But it can not explain the differences between Bohemia and Moravia or those between the east and west of Hungary. To find out the explanations for the differences between regions situated on opposite sides of the borders between Austria and Hungary, Germany and Poland, Hungary and Romania, is difficult as well. We believe that, if an explicative general structure exists for these inter-regional differentiations, it stands in the modernity spatial diffusion mechanisms. By this time, there is no rapid diffusion through the “export” or “import” of official elements of modernity (such as institutions, laws, activities), but a slow diffusion, over the centuries, of the behaviours, traditions and individual attitudes. This spreading, from near to near, created a long run continuous field of inter-relationships across Central and Eastern Europe. These networks of relationships were cut off by the borders of modern states, much more impermeable than those of the former empires and kingdoms. The diffusion of the modern demographic behaviours in Romania (figure 7) illustrates this process of construction of some extremely powerful territorial structures, which withstood even to the brutal interventions of the communism. The entrepreneurial spirit, the private initiative, the spatial and professional mobility or the opening to novelty, are basic features of the modern behaviours, which preserved better in the western regions and were the first which reacted to the transformation of the regime after 1989. The map 36 shows the spatial diffusion of the automobile after the fall of the communist regime. The differences of behaviour between western and eastern parts of Romania can not be put on the reckoning of the economic pre-existent discrepancies (Transylvania has always been perceived as the richest one). To have an offer, first of all, a supply must exist. The Western part of Romania reacted more rapidly to the new economic stimuli. The process of economic privatisation was also made faster. The private initiative developed earlier and the recapitalization of the economy started as early as possible. The existence and rapid increase of some small financial capitals allowed the development of a second-hand automobile offer, imported from Western Europe by small firms, by private persons or illegal speculating networks. The legal system spread afterwards to the eastern and southern parts of Romania, up to the present the automobile market being one of the most dynamic from the national economy (250,000 new cars sold in 2005 with 50% more than in 2004).

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Map 35 : The West-East diffusion of the demographic transition in Romania

Map 36 : Spatial diffusion of the automobile in postcommunist Romania

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The functioning of these resisting territorial structures, slowly developed at the infra-national levels, is also boosted in present times by the macro-dynamics of the global economy (figure 9). In search of rapid profits and in the circumstances of an international hardening of the competition, the foreign direct investments revealed a different spatial strategy depending on the comparative advantages offered various regions in the world. The diminishing of the state’s power in negotiations with great international firms grants to them a large freedom of movement, without any consideration to the programmes of regional (well balanced) development set up by the governments. Thus, expensive national programmes (the technopole programme in Hungary) or attractive legislative packages (the disadvantageous zones/areas from Romania) are ignored by FDI, which follow their own interests, leading to the emphasizing of regional differentiations. Thus, the spatial dynamic of FDI does not make anything but to strengthen the remarked West-East gradient at the continental scale, not only at the state’s level (through the preferential orientation of the capital towards the core proximal countries), but also at of the regional level (by the selective interest granted to the comparative or competitive advantages) (figure 40 and table 33).

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Figure 40 : The territorial organization scheme in Central-east Europe

Table 33 : Distribution of FDI in Romania (1990-2004 stock)by economic development region

Economic

development

region

Number

foreign

enterprises %

Stock FDI

000 RON %

Stock FDI

000 USD %

Stock FDI

000 EUR %

BUCHAREST-ILFOV 52241,0 52,3 12900737,9 49,8 7065351,8 55,5 5847657,9 55,5

WEST 11240,0 11,3 1356586,1 5,2 805856,5 6,3 666969,3 6,3

NORTH-WEST 10077,0 10,1 1521215,6 5,9 815905,4 6,4 675286,3 6,4

CENTRE 9612,0 9,6 1223037,1 4,7 626599,7 4,9 518606,9 4,9

SOUTH-EAST 5751,0 5,8 3719978,6 14,4 1317174,6 10,4 1090163,2 10,4

NORTH-EAST 4205,0 4,2 777441,1 3,0 354877,5 2,8 293715,3 2,8

SOUTH 4111,0 4,1 4000042,1 15,4 1540128,3 12,1 1274691,4 12,1

SOUTH-WEST 2614,0 2,6 415393,7 1,6 198017,2 1,6 163889,5 1,6

Total ROMANIA 99851,0 100,0 25914432,3 100,0 12723910,9 100,0 10530979,9 100,0

Source: National Bank of Romania

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The profound structure of the Central and East European territories, including Romania, combined with the economic circumstantial dynamics of the current period, makes the region the most relevant spatial level for analysis and the management of the territorial evolutions. Unfortunately in Romania, as well as in other states in the same region, the regional level lacked a relevant official administrative organization, because of the fears that the regional identities might put in danger the state’s unity. Under the pressures exerted from the European Union, all the countries have rapidly set up this regional level, but most of them, including here Romania, preferred to consider the regions as entities without judicial personality and gave them only the role of administrating the structural European funds.

7.3.2.1. Being/living l'entre-deux The analysis of the FDI is just a mean of testing the assertions and hypotheses advanced up to now. The geographical origin of the FDI (figure 10 and table 2) emphasizes a state of being which confirms the entre-deux position of Romania. For a long time, the distrust of the European Union towards Romania also manifested through a limited presence of the direct investments, excepting two notable situations: Germany and Netherlands. The promotion of the adhesion negotiations modified this situation, nowadays the European Union providing 52.3% from the foreign capital firms and 74.3% from the FDI stock. This fact reduced in relative terms the presence of the USA, which, between 1990 and 1993 was the most important foreign investor. The acceptance of the American military bases of operation on the national territory was done by the power from Bucharest hoping that the great companies from the USA will invest more, improving thus the actual shares of only 4% from the firms and of 5.3% from the stock volume of FDI.

On the second place of the foreign investors stands Asia, with a share majority of the Middle East countries. In comparison with the western investors, the Asian countries presents an inversed report of the FDI parameters: although contributes with only 7.1% from the total volume of the investments, it covers only 37.4% (respectively 39,581) from the foreign capital firms subscribed between 1990 and 2005. This report means numerous investments but reduced as volume, and can be translated in many cases through the definitive settlement in Romania of citizens from Lebanon, Syrian Arab Republic, Irak, Jordan, China, India. The strong relations between Romania and the Middle East countries are described by the frequency of the TAROM company flights towards this region (see figure 4). This situation leads the thought to the interface

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position that the communist Romania had between the West, Israel and the Arab world and to the perenniality of the diplomatic and economic relationships established in that period, which can be proved as the best card from present. The crisis of the Romanian and French journalist hostages in Irak, solutioned in favour of them and with the help of the Romanian secret services, is an example in this sense. The traditional markets in the Arab countries from the Middle East and Africa, with a socialist orientation, can also constitute the trump for the foreign companies which invest in Romania. A notable absence on the investors’ shortlist is that of Russia, although present in Romania in the petroleum industry, gas distribution, metallurgy... The explanation deals with the fact that the Russian investments get through the agency of the off-shore firms (especially from Cyprus). This so-called “shyness” refer to Japan’s situation after the Second World War, when its investments from the Pacific were seen with a kind of hostility by the population of those states which had been occupied and had bore the rigours of the Japan occupation. The historical animosities between Romania and some of its neighbours, respectively Russia and Ukraine, launch for many times nationalist outbursts from both parts and prevented from the establishment of some common economic and diplomatic between the given parts.

Table 34 : Romania: geographical origin of the FDI (1990-2005 stock)

Foreign

enterprises

(number)

Foreign

enterprises

(%)

FDI stock

(000 euros)

FDI stock

(%)

EUROPE

from which EU

58246,0

55349,0

55,0

52,3

9437262,3

8994817,6

78,0

74,3

ASIA

from which Middle East

39581,0

31380,0

37,4

29,6

859939,4

593211,8

7,1

4,9

NORTH AMERICA

from which USA

5245,0

4195,0

5,0

4,0

692191,5

645693,4

5,7

5,3

OTHER 2459,0 2,3 199829,8 1,7

OFF- SHORE 392,0 0,4 918061,7 7,6

Total ROMANIA 105923,0 100,0 12107284,7 100,0

Source: National Bank of Romania

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Map 37 : The origin of the FDI in Romania

The distribution of the investments in Romania favours the capital, Bucharest, and the western regions (see table 1). Only the Bucharest municipality concentrates almost 47% from the investment stock and 50% from the total amount of the foreign capital firms subscribed up to year 2005.

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Map 38 : Distribution by county of the FDI stock

The western regions (see figure 11) derive advantage from a double advantage: there are the most developed areas from the country besides having an important Magyar minority represents a preferential target for the proximity investments in the immediate neighbourhood of Hungary (see WP8.7.). The major part of the Hungarian investments (353 millions of EUR, respectively 2.91% from the total amount) exist under the form of small but numerous firms (5250, respectively 4.96% from the total) and tend to concentrate in those areas in which the Magyar minority is localized, what brings up the risk of outlining some new spatial lack of balances.

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The eastern and southern, rural and less developed regions do not attract either the international financial waves, or the investments of proximity, because the neighbours are countries which were in an economic dilemma (Serbia, Bulgaria, Republic of Moldova, Ukraine). For example, the Republic of Moldova invested only 15 millions of EUR (0.12%) in 1992 through small firms (1.88%) and Bulgaria 9.2 millions EUR in 584 firms.

The analysis of the FDI location after the investment stock shows the tropism created by the comparative advantages, the major part of the investments being attracted by the western regions and by the diagonal axis Bucharest-North-West, with an acknowledged industrial tradition. To those latter is also added the Constanţa county which profits from the existence of the greatest port in the south-east of Europe, stream-lined and in directly bound with the Danube-Main-Rhine corridor.

Because all the communist economies were de-capitalized, the main engine of the present economic dynamics is represented by the FDI, the only ones that can support the transformation charges of the production structures and those of the services. The regions which take advantages from the FDI consideration are, consequently, in a great evident advantage towards those left in shadow.

The analysis of the spatial organization of the Romanian custom and that of the spatial intensity of the exterior trade (figure 12) confirms this fact. If the western part of Romania has five regional customs divisions (Timişoara, Arad, Oradea, Cluj-Napoca and Braşov), in the eastern side of the country only one appears, centered on Iaşi municipality. This fact can be explained only through the greater intensity of the trade activities in the regions from the western side, the eastern border/frontier being in many parts inert. In the south, the regional customs divisions are organized around the seaport (Constanţa), fluvial ports (Galaţi) and around the capital (Bucharest) which tends to become a regional metropolitan area. The spatial organization of the customs and the intensity of the exterior trade – symbols of some profound territorial structures – are governed consequently also by the external forces (FDI preferences, transcontinental commercial flows, borders opacity degree, metropolization).

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Map 39 : Spatial patterns of the Romanian external trade

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7.4 Conclusion

The present stage of the research achieves a qualitative analysis of the Romania’s geographical position and of its territorial consequences, using a concept which seems to be adequate to the aim, respectively that of the entre-deux. In fact, Romania is used as a pretext of this study, the latter aiming to grasp a general pattern for those states from the close proximity peripheries. The preliminary results of the research, which follow to be verified, quantitatively, in the next stage, lead to the following conclusions: - The integration into the European Union of the peripheral states from the Eastern Europe do not increase their feeling of the national security; from here some distinctions between the foreign policy of the Union and that of the new state members or candidates, which seek new strategic alliances. The policy of the “sanitary belt” seems to impose from itself: a privileged status for the neighbour states (Ukraine, Republic of Moldova, Caucasian countries…) can bring an extra-advantage in terms of stability at the European Union borders. - The policy of the European Union of including new members or of creating a new belt with a privileged status in the close proximity, must not release an attitude of competition between these states, because their entre-deux position keeps alive the memory of the past conflicts, and from this, the nationalist outburst can be launched anytime. - The entre-deux states rise problems in the integration view under a form or another in the European Union (tensions at the frontiers, cultural differentiations, fragility in front of some processes such as the administration of the FDI claims/pretentions or globalisation) but it also deals with some advantages (pre-existent diplomatic relations with sensitive spaces, the know-how necessary to the joining of the profoundly inert structures with the circumstantial dynamics, the keeping of the architecture and of the regional spirit). - The states of the entre-deux represent another valid relay in the reception and for the diffusion of the western modernity towards outside, not only at the official level (through the rapid and coherent promotion of its values and institutions), but also at an officious level (on long term, through the promotion from near to near of the individual and group behaviours and attitudes based on alterity and on the respecting of the human values).

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References

Grasland, Cl., Mathian, H., Vincent, J.-M. (2000) – Multiscalar analysis and map generalization of discrete social phenomena : statistical problems and political consequences, paper presented at the UN/ECE Conference in Neuchâtel, April 2000, revised version proposed for publication at the UN/ECE Statistical Journal, May 2000

Grasland, Cl. (1997) – Les noyaux de peuplement en Europe Centrale. Concentration spatiale, concentration sociale et intégration politique şi Existe-t-il une Europe Centrale démographique ?, pp. 84-118 şi 95-119 in V. Rey (dir.) – « Les territoires centre-européens. Dilemmes et défis. L’Europe médiane en question », La Découverte, Paris

Grasland, Cl., Boursier-Mougenot, I., Cattan, N., Rozenblat, C. (1993) - Images de potentiel de population en Europe, pp. 333-345 în « L’Espace géographique », Doin, N° 4, Paris

Groza, O. (2005) - Maillages administratifs officiels et identités territoriales officieuses: les échelons spatiaux de la différenciation identitaire en Roumanie, p.153-160 in V. Rey ; T. Saint-Julien - L'identité européenne en question, Editions de l’ENS-LSH, Lyon, ISBN ?

Groza, O. (2005) - Système de villes et niveaux d’identification territoriale en Roumanie, p. 224-237 in V. Rey ; T. Saint-Julien - L'identité européenne en question, Editions de l’ENS-LSH, Lyon

Groza, O., Muntele, I. (2004) - Le maillage sans territoire : la région de développement en Roumanie, p.195-205 in Rey V., Coudroy de Lille L., Boulineau E., « L'élargissement de l'Union EUropéenne : réformes territoriales en Europe centrale et orientale » , L'Harmattan, Paris

Groza, O. (2003) – România : integrare şi identitate sau dilema spaţiu-teritoriu (La Roumanie: intégration et identité ou le dilemme espace-territoire), p. 29-46 in "Geographica Timisiensis", vol. XII, nr 1/2003, Universitatea de Vest, Timişoara

Groza, O. (2002) – La transition des systèmes industriels dans les PECO, p. 309-323 in Historiens et Géographes- La transition post-communiste dans les pays d’Europe centrale et orientale, Tiré à part des numéros no 377 (janv.-févr. 2002) et 382 (mars 2003), Paris

Groza, O., Trofin-Gille, C., (2001) – Les élections roumaines : le poids du passé, p. 123-136 in Belgéo – Revue Belge de Géographie, no 1-2, 2001, Bruxelles

Lundmark, M., Malmberg,A., Malmberg, B. (2000) – Regional Unevenness and Geographical Convergence in Europe. Concepts, Models and Data, pp. 30-57 in G. Horváth (eg.) - « Regions and Cities in the Global World », Centre for Regional Studies, Hungarian Academy of Sciences, Pécs

Heller, W. (dir., 1998) - Migration and Socio-Economic Transformation in South-East Europe since 1990 and Perspectives of Regional Developpment : Romania as an Example, Sudosteuropa Studies, 62, Sudosteuropa Gesellschaft, Munchen

Rey, V., Groza, O. ; Ianoş, I. ; Pătroescu, M. (2000)- Atlas de la Roumanie, GIP-Reclus/La Documentation Française, Montpellier-Paris

Rey, V. (2001) – Les Europes orientales, la force des différences, pp. 241-251 in Y. Michaud – “Université de tous les savoirs”, vol. 6 – “Qu’est-ce que la culture ?”, Editions Odile Jacob, Paris

Rey, V. (dir., 1998) – Les territoires centre-européens. Dilemmes et Défis. L’Europe Médiane en question, Editions La Découverte, Paris

Rey, V. (1996) – Les Europes orientales, pp. 10-45 in « Géographie Universelle », vol. 10, Brunet, R. et Rey, V. – Europes Orientales, Russie, Asie Centrale, Belin-Reclus, Paris

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8. FOCUS ON SWITZERLAND

Marco Keiner, ETH Zurich

8.1 Introduction In Europe and the World, Switzerland is associated with features like

• Direct democracy • Fiscal paradise • Neutrality • Specific high quality products (watches, chocolate, cheese, and

manufacturing) • Transit corridor between Western Europe and Italy, and • The divide between its Government (the Federal Council) and its

population in regard of joining the European integration process This text will highlight the political and economic relations between Switzerland and the European Union and show the process and the state of the mutual negotiations of coming together. It is a compilation of the following official documents: Federal Council: Integration Report 1999. Berne 2000,

http://www.europa.admin.ch/europapol/off/ri_1999/e/index.htm

Federal Council: New Foreign Policy Report of the Federal Council (Foreign Policy Report 2000) - Presence and co-operation: Safeguarding Switzerland's interests in an integrating world. Berne, 2000; http://www.europa.admin.ch/europapol/off/ap/e/index.htm

Swiss Federal Chancellery: Trends and possible future issues in federal policy - Challenges 2003-2007, Berne 2002; http://www.admin.ch/ch/e/cf/herausforderungen/

Swiss Integration Office DFA/DEA: The Seven Bilateral Agreements Between Switzerland and the European Union of 1999 – Report on the Agreements and Companion Measures, with Explanations. Berne, 2002.

Swiss Integration Office DFA/DEA: Explanatory documents on Swiss European policy; http://www.europa.admin.ch/europapol/expl/e/index.htm

Swiss Integration Office DFA/DEA: Bilateral Agreements I; http://www.europa.admin.ch/ba/e/index.htm

Swiss Integration Office DFA/DEA: Bilateral Agreements II; http://www.europa.admin.ch/nbv/e/index.htm

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8.2 Development trends of the European union and Switzerland 8.2.1 Switzerland and Europe The process of European integration has entered a new important phase. Eight central and eastern European countries, together with Malta and Cyprus, have joined the EU in 2004. A further two countries from eastern Europe, Bulgaria and Rumania, and most probably Turkey as well, are set to become members at a later date. The European Single Market has become more clearly defined with the introduction of the common currency. Overall, Europe is finding its way towards a state of political and economic order that will bring it peace, stability and prosperity. Apart from the European Union (EU), NATO remains a stabilising power factor complemented by the mechanisms of the OSCE (Organisation for Security and Cooperation in Europe). The EU is the most important partner of Switzerland - politically, culturally and economically. The EU and Switzerland are founded on common fundamental values such as democracy, regard for human rights and a constitutional state. The EU is by far the most important trading partner of Switzerland: three-fifths of Switzerland’s exports are sent to EU countries, while four-fifths of Switzerland’s imports come from there. Switzerland also has close contractual ties with the European Union. 1972 saw the conclusion of the Free Trade Agreement (for industrial products), while seven bilateral agreements were signed in 1999 in the areas of free movement of persons, overland transport, air transport, agriculture, research, and technical barriers to trade and public procurement. These bilateral agreements I came into force on 1 June 2002. Further negotiations in nine new areas (Bilaterals II) have been concluded on a political level on 19 May 2004. 8.2.2 Assumptions on overall future development trends Over the last 15 to 20 years, the basic international conditions for the Swiss economy and society but also for federal policy have radically changed. Technological advances in transportation, in electronics and in their areas of application such as IT and telecommunications, in the development of transport infrastructure and the lowering of transportation costs, as well as the sustained trend towards liberalisation, increasing international competition through the reduction of trade and customs barriers, particularly also at regional level (EU, NAFTA, etc.) increasingly enable companies, institutions and individuals to extend their activities to the regional and global level. The end of the Cold War

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and the transformation of the former planned economy state block have had a legitimising, reinforcing and accelerating effect. These developments form the foundation for an exceedingly manifold and complex process, which for simplicity’s sake is referred to in this report as ‘globalisation’. Many developments evolving today will probably not fully unfold before the first or second decade of the 21st century, but are still fraught with considerable uncertainties and could cause far-reaching global structural changes (new technological system, further integration of the global economy through multi-national enterprises, shift in the balance of global economic power, accentuation of global environmental problems, etc.).

From Switzerland’s point of view, globalisation possibly finds its greatest expression in the momentum of European integration. The countries of Europe see European integration primarily as Europe’s answer to the increasingly global challenges. In the 1990s, the EU was enlarged to include Sweden, Finland and Austria and has been consolidated with the treaties of Maastricht, Amsterdam and Nice. The most evident changes in recent years have been Economic and Monetary Union with a common central bank and the highly symbolic single currency, as well as the efforts to establish a Common Foreign and Security Policy including a European Security and Defence Policy. The coming years will be characterised by the structural reform of the EU and the arrival of new Member States. The accession to the EU of eight Central and Eastern European states together with Malta and Cyprus is set to take place in 2004. Two further Eastern European countries (Bulgaria and Romania) and possibly Turkey should be able to join at a later date.

The consequences of globalisation and the progressive enlargement and consolidation of the European integration process are already evident in Switzerland today and it can be assumed that they will continue to intensify. Considerations on Swiss trends and future challenges are, therefore, inseparably linked to assumptions regarding overall international conditions, while because of the emerging cooperative global integration movement at two levels (cooperation within and between global regions), a distinction is made between global and a European level for practical reasons.

Developments in the international environment over the coming ten years:

• Slightly accelerating economic growth at both the global and the European level, however, with the possibility of temporary setbacks; weaker growth in Asia as compared to the early 1990s; initially only a slight shift in balance of power within the global economy.

• Continuous reinforcement of global networks within or between various companies and research institutions through alliances, mergers etc; further increasing mobility of capital within the frame of liberalised and

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highly modern capital markets; sustained intensity of geographic competition in particular between OECD countries, but also with the emerging markets.

• Accelerating modernisation processes towards the information, knowledge and service society, especially in OECD countries.

The central foreign policy questions and problems that Switzerland will have to confront in the coming decade have to some extent been part of the fields of Swiss foreign policy activities for some years already. Swiss foreign policy is characterised by continuity and calculability. Switzerland will concern itself with most of the existing and future international challenges. It too will be required to reach political decisions and undertake social adjustments as a result. Switzerland has the strength and vitality to respond to these challenges independently. In so far as these challenges are of significance for foreign policy, it certainly cannot claim to have ready answers to every question. But one essential observation surely emerges: these global issues far exceed the capacity of an individual state to respond and find solutions. If Switzerland wishes to make any contribution to the realisation of global responses, it will only be able to do so in close collaboration with other states. The fact that these “other states” are, in Switzerland’s case, primarily the states of Europe is clear on the basis of common values, traditions, convictions and interests. Self-righteousness and absence can endanger the country's major interests. 8.2.3 Economic and Population Trends in Switzerland

In the even tougher international competition in terms of location and market share, Switzerland appears to be in a good position judging from cross-sectional data, but judging from longitudinal data (development trends of productivity, investments, income, taxes, etc.) its position is less favourable. Unrestricted access to the EU market is vital for Switzerland’s economic development.

As a result of the introduction as planned of Economic and Monetary Union in 1999 there was initially a sideways development in the exchange rate of the Swiss franc to the Euro. From mid-2000 there was an appreciation of the Swiss franc, which has continued and is set to put a strain on the Swiss export economy. However, Swiss exports obtained easier access to the European single market when the bilateral agreements came into force in June 2002, which provides some compensation.

The assumption is that a high level of private consumption and a growth in exports of 2.2% in the period up to 2015 will result in average economic growth of 1.5%

per annum.

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The traditional leading sectors of the Swiss economy (chemical industry, precision instruments and watches, banking and insurance) are expected to maintain their competitive edge.

They are the linchpins of economic prosperity.

Rationalisation and restructuring will continue in the wake of European Monetary Union and further service industries such as banks, insurance and management consultancies will be affected.

Certain traditional industries such as mechanical

engineering and metal processing could experience a renaissance. Others are on the threshold of technological innovations (IT, communications). In the future there is likely to be increased demand in the health sector. It is anticipated that jobs are more likely to be created in sectors catering to the domestic market, which are less exposed to the pressures of international competition. The tertiarisation of the economy will increase, not least on account of the fact that many new occupational images in the industrial sector are taking on the character of services as a result of the new ICT. It cannot be ruled out that Switzerland could degenerate into a dual economy with dynamic sectors characterised by high productivity and few available jobs and sectors with lower productivity, which can offer employment, to a certain extent on account of state funding mechanisms and regulations, but do so under unfavourable working conditions.

The construction industry can keep ticking over in the event that major government investments (Rail 2000, NRLA, national road construction) are realised and due to essential maintenance of existing buildings. There is no expectation of a boom as the weak development of demand in the construction of housing (population development is the main reason here) and overcapacities in the industrial-commercial sector are likely to continue to have a dampening effect.

International competition in the tourism sector between the different holiday destinations in response to the globalisation processes will remain and the changed security situation will have an influence on visitor figures. In the medium term further restructuring and adjustment processes in this sector can be expected.

As a result of the increasing number of gainfully employed persons and stable economic growth as well as the smooth operation of the labour market, unemployment will fluctuate around the 3% mark depending on the economic trend. Productivity will only be able to grow to about 1.5% per annum under the same competition conditions.

The clearly discernible trend since the 1990s towards flexibilisation of the labour market will continue.

The number of invalidity cases and welfare claimants

(welfare offices) offsets this.

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Location attractiveness of Switzerland:

• Losing ground

• Unrestricted access to EU market is key Exchange Rate:

• Franc goes from strength to strength

• Easier access to European domestic market Economic growth:

• 1.5% pa on average up to 2015

Structural change:

• Existing market leaders remain linchpins of economic growth

• Increased pressure due to EMU

• Continuing tertiarisation of the economy

• Accentuation of dual economic structure? Construction industry:

• Stabilisation in the event that major projects are realised Tourism sector:

• Further restructuring Labour market 1:

• Unemployment level to remain below 3% to 2007, then slight fall possible Labour market 2:

• Flexibilisation to continue

8.3 The European policy of the Swiss federal council The Swiss Federal Council approved the new Foreign Policy Report at its closed meeting on 15 November 2000. The Report replaces the previous "White Paper on Switzerland's Foreign Policy in the 90s" of 29 November 1993. The "Foreign Policy Report 2000" summarises how the Federal Council shaped Switzerland's foreign policy in the past decade and sets out its objectives and priorities for the decade ahead.

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In its Foreign Policy Report of 15 November 2000 the Federal Council set out its long-term aim of taking Switzerland into the EU as well as the three preconditions for the commencement of entry negotiations: Firstly: Switzerland first wishes to gather experience with the seven bilateral agreements from 1999. It wants to see how these agreements work out in practice. Secondly: The effects of joining the EU on central areas of Swiss statehood must be thoroughly clarified and convincing answers found to any outstanding questions. The Federal Council will publish a report on the pros and cons of EU membership in the second half of this legislative period outlining the consequences for the country’s federalism, popular rights, neutrality, system of government organisation, finances, economic and monetary policy, agriculture, migration policy, not to mention its foreign and defence policy. Thirdly: There needs to be broad domestic support for the aim of EU entry. On 4 March 2001 the people and the cantons overwhelmingly rejected the popular initiative "Yes to Europe!". This initiative was intended to oblige the Federal Council to open immediate negotiations on entry to the EU. Voters heeded the Federal Council’s recommendation to reject this popular initiative because the preconditions for the commencement of negotiations on entry to the EU had not yet been met. The Federal Council reaffirmed the key elements of its European policy after the vote on 4 March 2001: • in the short term, the implementation of the seven bilateral agreements, their

extension to the ten new EU Member States and the conclusion of the second series of negotiations are the top priority.

• in the medium term, priority will be given to obtaining approval of the second series of agreements by the Federal Assembly and the Swiss people and their subsequent implementation.

• the longer-term aim of the Federal Council’s European policy is to take Switzerland into the European Union. The Federal Council is convinced that in the long-term Switzerland can better safeguard its interests within the EU than outside it. Today, many problems can no longer be resolved through the lone actions of individual states, but only in acting together at European level.

8.4 Stages of swiss european policy

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Switzerland has consistently adopted a European policy aimed at closer cooperation with the other nations of Western Europe. At each step it has been careful to ensure that this policy is firmly anchored in public law and intergovernmental agreements. It nonetheless followed the development of European integration in the supranational framework of the European Community (EC) with scepticism, preferring a European free trade area, as indeed did the United Kingdom. The European Community (EC), the objective of which was to reconcile the belligerents of the two world wars, in particular France and Germany, and to prevent any further outbreak of conflict between participating countries, was created without any thought being given to Swiss participation. And indeed Switzerland had never seriously considered joining, nor had its membership been sought by the EEC member nations. Quite the opposite in fact, since the demand for association which Switzerland eventually presented in 1962 was put in a bottom drawer due to the influence exerted by the French President Charles de Gaulle. Switzerland thus ran the risk of being cut off by customs barriers from its principal trading partner, Germany. This problem was not overcome until Switzerland signed a free trade agreement with the EC in 1972. Although the United Kingdom joined the Community in 1973, seven years of stagnation in the process of European integration made it possible for Switzerland to just coast along without feeling any real pressure to negotiate. However the conclusion in 1985 of the Single European Act and the effective creation of the single market with the four freedoms (freedom of movement of persons, goods, services and capital) that resulted from this, forced Switzerland and the other countries of the European Free Trade Association (EFTA) to reconsider their position, eventually leading at the end of the 1980s to negotiations for the creation of a European Economic Area (EEA) based on the same four freedoms. Ultimately however the limited objectives which the EFTA states had set for themselves in these negotiations were overtaken by a number of major events that reshaped the world: the fall of the Berlin Wall, the collapse of the Soviet Union, and the superpowers' renunciation of their Cold War commitments in Germany and Europe. It became clear to all the states of the "old continent" that henceforth they must themselves accept responsibility for peace and prosperity in Europe, for indeed there was no other choice. The vast majority of EFTA countries (Austria, Finland, Sweden, Norway and Switzerland) consequently decided to apply for membership in the European Union. Switzerland suspended its application in 1992, after the Swiss electorate rejected the government's proposal to join the EEA. In Switzerland's case relations with the EU were eventually to be given a new lease of life by the decision to seek sector-by-sector bilateral agreements. After lengthy negotiations, seven such agreements were signed with the EU in 1999. These were approved by a large majority of the electorate in the referendum of

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May 2000. The agreements came into force on 1 June 2002. Further bilateral negotiations between Switzerland and the European Union on ten new areas are also in course since June 2002. 8.4.1 First Stage: from the end of World War II to the foundation of EFTA At the end of the Second World War, there was great need for political and economic unity in Europe. Switzerland however did not feel tempted to participate in the West European integration process, for her economy was flourishing and the policy of neutrality had proven its worth. Its leaders therefore decided against joining the European Council at the time of its creation in 1949 as the first step towards a federation of European states. It was not until the Treaty of Rome did found the European Economic Community in 1957 that her hesitation about joining the European Council was finally overcome. The Confederation became a member of the European Council in May 1963. An event of singular importance to the Swiss economy occurred in 1960 with the creation of the European Free Trade Association, EFTA. When France opposed the idea of extending the six-member EEC, the United Kingdom, Denmark, Norway, Sweden, Austria, Portugal and Switzerland decided it was time to get together to defend their economic interests and create a free trade area of their own. Some of these nations, the UK and Denmark in particular, saw it as a transitional step. Switzerland on the other hand had its eye on a free trade agreement with the EEC. Thus it was that in the Sixties, Switzerland laid the foundations of a policy based on step-by-step pragmatism in the context of bilateral negotiations. The coordination instrument of this pragmatic policy would be the Integration Office DFA/DEA, created in 1961. 8.4.2 Second Stage: from the free trade agreement to the Single European Act In 1972, Switzerland achieved one of her goals in the form of a free trade agreement (FTA) with the EEC. While ensuring that Switzerland would not be left entirely out of the EC integration process, this agreement did not require relinquishing any sovereignty, and also left it open for the Swiss to negotiate additional trade agreements. The only institution the partners had in common was the Joint Committee, which was not however endowed with any supranational powers. This arrangement allowed Switzerland to keep intact its neutrality, federalism and direct democracy. The FTA allowed plenty of scope for new agreements. Over the next 20 years, Switzerland took full advantage of this

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leeway, concluding well over 100 special bilateral treaties with the EC. Most of these involved trade in goods. The two sides did have talks on other key policy areas however, such as transport, the environment, research and development. And they reached several understandings in these areas too. The participation of Switzerland in the Community's efforts to co-ordinate standardisation is also worth mentioning in this context. This sector-by-sector approach, at the level of bilateral negotiations, was seen as the most viable solution over the long term. It was thanks to the success of this approach, in the atmosphere of economic and political crisis that prevailed within the EEC at the beginning of the 80s, that there would be no need for serious discussion on the "Europe question" in Switzerland for many years to come. Despite intensification of the West European unification process, culminating in the Single European Act (SEA) of 1986, this state of affairs continued in Switzerland. It was only with the Swiss people's decision not to become a member of the United Nations that same year that doubts began to set in, being first expressed in the French-speaking cantons of western Switzerland, fearful of the country's increasing isolation. But concern was also spreading in the rest of the country, which was as much worried by the prospect of economic discrimination as by political isolation. This resulted in a more active policy on Europe, and efforts to ensure the compatibility of all new Swiss legislation with the laws of the EC (the so-called Acquis Communautaire), which began in May 1988. In August of the same year, the Federal Council published its first major report on Europe, entitled "Switzerland's position on the European integration process". In this document, while advocating an integration policy based on sector-by-sector negotiations, the Federal Council recognised that times had changed, and admitted for the first time that full EC membership should not be categorically ruled out. 8.4.3 Third Stage: Switzerland seeks its place in the Europe of the 21st century In January 1989, Jacques Delors who was still President of the European Commission, presented his EEA project to the European Parliament in Strasbourg. Switzerland's dream of a "golden mean" solution seemed to be coming true, for the EEA would require neither a common policy with regard to third countries, nor a common economic and monetary policy. Moreover, there would be little need to adapt Swiss legislation. Switzerland was also ready to accept the Single European Market part of EC law (Acquis Communautaire) as the sole basis for negotiations, on the condition that she be granted the right to

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participate in the legislative decision-making process. It was at this point, at the end of 1989, that the bargaining began, on the one hand between the EC and EFTA, but also between the different EFTA partners, which had been unable to agree on a unified negotiating position. It was not until October 1991, in Luxembourg, that the breakthrough came, which allowed Switzerland to share in the so-called four freedoms (the free movement of goods, persons, services and capital). Following the sweeping changes that had been wrought in the world's political map, EEA membership could no longer be said to really meet Switzerland's interests, except partially. For the situation of the countries of Eastern Europe had changed entirely, the Soviet Union had crumbled, and the superpowers no longer had the same engagements in Germany and Europe. In any case the EEA agreement did not allow Switzerland to participate in the decision-making process. After signing the EEA agreement in Porto on 2 May 1992, the Federal Council submitted its request for EU membership to Brussels on 26 May 1992. The Swiss government's "Eurolex" programme, aimed at bringing Swiss law into line with that of the EC, was unveiled on 1 June. Less than two months later however (6 December 1992), the EEA option was rejected by 50.3% of the electorate, as well as by 14 cantons and four half-cantons. The government interpreted the result as a mandate to eliminate or at least to minimise the main disadvantages of Switzerland's continued non-participation in the EEA, by negotiating agreements with the EU, sector by sector. At the same time, the government decided that a revitalisation programme was needed to improve Switzerland's attractiveness as an economic centre, to be achieved by the dismantling of various "barriers", and by liberalising the internal market and the cartels that exist in different sectors of the economy. The application to join the EU was frozen. At the end of 1993, in its report on Swiss foreign policy in the '90s, the Federal Council confirmed Switzerland's commitment as a partner to Europe, and consequently the maintenance of full EU membership as the long-term objective of the country's integration policy. Next, the government focused its attention on the only objective capable of implementation in the short term – the sector-by-sector bilateral negotiations with the EU. These negotiations were begun in December 1994 and concluded in December 1998. Signed in Luxembourg on 21 June 1999, the agreements have entered into force on 1 June 2002. With the publication of its 1999 Report on Integration the Swiss government gave parliament, in February of that year, a new summary of its view of relations between Switzerland and the EU. The Report on Integration is intended to serve as a solid basis for an objective and comprehensible discussion for everyone interested in the debate on European integration. It is on the strength of this debate that the Federal Council will eventually determine whether or not

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domestic conditions are suitable for the beginning of negotiations with the EU for Swiss membership. The «Yes to Europe» popular initiative was rejected by a clear majority on 4 March 2001. 77% of the voters said no to this request for the Federal Council to open immediate negotiations on accession to the EU. Swiss citizens therefore endorsed the position of the Federal Council not to seek EU membership at this stage because the conditions necessary for such a step do not exist at present. The Federal Council set out its European policy clearly in its foreign policy report of November 2000. Implementation of the seven bilateral agreements with the EU is the immediate priority. In the medium-term, Switzerland wishes to negotiate further bilateral agreements with the European Union in new areas. These negotiations are in course. EU accession continues to be the long-term objective. The Federal Council is convinced that Switzerland will be able to safeguard its interests more effectively as a member of the EU than if it stays outside. This is the only way in which it can have its stay and help to shape decisions, which have a direct bearing on Switzerland, too. However, before negotiations on accession are opened, the Federal Council believes that three conditions must be satisfied: in the first instance, Switzerland wishes to acquire experience of the seven bilateral agreements. Secondly, the implications of EU accession for central areas of the Swiss constitution must be studied in detail and proposals made for the necessary reforms. Thirdly, broad domestic policy support for the goal of accession must be secured. The history of the negotiations brought the following facts to light:

• One advantage of the sectoral route is that, in the choice of the subjects for negotiation, Switzerland has an equal say with the EU while the implementation and application of the conventions takes place autonomously in Switzerland and the direct costs remain low. This is because contributions to the budget of the European Union only have to be paid in certain specific instances (for example for research).

• The following arguments militate against the sectoral route as a long-term instrument of Swiss integration policy:

• The EU shows great reluctance to choose further negotiating areas because of its own diverse internal interests. Negotiations can only be conducted on matters, which are of some interest to all fifteen Member States.

• The length and complexity of the negotiations are considerable because of

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the special circumstances prevailing in the EU. With fifteen Member States the EU has achieved a degree of complexity, which makes sectoral approaches difficult. Whenever one specific problem is examined (e.g. freedom of movement for persons), new imbalances of interests may arise between the EU Member States, which in turn have to be compensated by concessions in other areas (such as agriculture). The systematic absence of Switzerland from meetings between the fifteen EU States makes it difficult to effectively clear up real or imaginary misunderstandings as to Swiss positions in due time.

• There are also institutional barriers to the completion of further sectoral treaties: on central matters of mutual interest, a treaty solution could only be arrived at if Switzerland were to transfer sovereign rights to the EU and, in particular, acknowledge the supreme judicial authority of the EU Court of Justice and the legislative and political majority decisions of the Council of Ministers. These matters, which cannot be settled by sectoral treaties but only by EU accession, include e.g. the elimination of the customs union frontiers for the trade in goods, comprehensive cooperation on internal security on a basis of parity, institutional safeguards for monetary and exchange rate stability and membership of economic treaties between the EU and other regions of the world (NAFTA, Mercosur, Apec, Mediterranean region etc.).

• A negative counterweight to the acceptability of sectoral agreements in terms of sovereignty is the circumstance that an adjustment of the treaties to changing circumstances (for instance progress in technical criteria for products or in environmental protection legislation) may be a cumbersome process, especially if parliamentary approval of the treaty change is necessary in all fifteen EU States.

The Federal Council has made a thorough identification of the sectoral route in the past years and will continue on this road jointly with the European Union to the extent that this is possible and both parties have an interest in doing so (entry into force of the sectoral conventions; in addition, modernization of the rules on free trade in food industry products, membership of Europol, negotiations on a parallel agreement to the Dublin Convention on Initial Asylum Seekers, Swiss participation in EU programmes, e.g. in education, film, promotion, statistics and environmental monitoring). On the other hand, the Federal Council is well aware that the limits in terms of content and procedures for sectoral agreements between Switzerland and the European Union will soon have been reached 8.4.4 EEA participation

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Swiss membership of EEA as compared to EU accession is facilitated by the limited implications in terms of formal constitutional policy and lower costs.

As compared to EU accession, the need for adaptation in agriculture would not exist; there would be no need to change our financial regulations (no acceptance of the EU minimum value added tax), while adaptations to comply with the conditions of Economic and Monetary Union would also not be necessary.

In the event of an unsuccessful outcome to the ratification procedure for the sectoral conventions, the EEA would be of interest in terms of its content (the four freedoms); the solutions which remain to be negotiated in all areas, in particular in national transport and social insurance law would be much the same for Switzerland as the solutions arrived at in the sectoral conventions concluded at political level on 11 December 1998.

However, factors against participation in EEA, even as an intermediate step to EU accession, include institutional weaknesses and shortcomings in terms of content (no customs union or common foreign trade policy, no common agricultural policy, no full rights of co-decision), the obligation of the EFTA countries to speak with a single voice and the circumstance that the EEA increasingly fails to cover important areas which will play a vital role in the European future of Switzerland (monetary stability, policy on asylum seekers, internal security, external policy).

The opinion that is sometimes voiced to the effect that the relationship between Switzerland and the EU might be permanently governed by an association treaty going beyond the content of the EEA Convention and specifically tailored to suit Switzerland would presuppose a willingness of the EU to negotiate in that sense and fails to recognize the fact that only EU Member States can exercise rights of co-decision. 8.4.5 Switzerland remains outside

The continuation of the existing pragmatic policy of small steps with all its known advantages and drawbacks is less an integration policy option as far as the Federal Council is concerned, than the expression of a reality which remains valid until the policy change which the Council seeks finally comes about.

On the other hand, measures to shadow EU policies or the maintenance of an offshore position are not integration policy instruments, which the Federal Council is examining in more detail at this juncture. The declared systematic and unilateral shadowing of legal developments in the EU would be politically dubious and economically risky as Switzerland would constantly have to make unilateral contributions if it adopted this approach. The offshore policy would

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result in a fundamental change in the economic and social situation of the country from which a few people might profit greatly, but would cause the nation as a whole to lose its present character. Mixed forms of the policy of remaining in isolation would repeatedly come into conflict with the constitutional and economic policy deficits referred to earlier.

8.5 Eu accession 8.5.1 Identity, independence, federalism and people’s rights In the area of federalism, the cantons would have to cooperate in decision-making in all matters of relevance to them, which are discussed and decided in the EU. The Federal and cantonal Authorities would conduct an in-depth dialogue on appropriate measures in the run-up to EU accession. The main emphasis would be on measures to strengthen information for the cantons, improve cantonal consultation in preparation for decisions and ensure suitable representation of the cantons in some EU bodies.

The regional policy of the Federal Council could be continued as at present and adjusted still more effectively than is the case today to Swiss needs through cooperation within the EU.

Accession of Switzerland to the European Union would be compatible with the Federal Constitution. Article 89 of the Federal Constitution, which requires a popular and cantonal majority for such a decision, was revised in 1977 precisely with a view to EU accession.

Clearly, the fifteen Member States of the EU have retained their sovereignty. As an EU Member, Switzerland would have an opportunity to influence and help to shape the rules, which are applied on an ever-growing part of our continent. Given the central geographical, demographic, political and economic values of Switzerland and the EU, for many years now, Switzerland has no longer been able to escape the growing influence of EU decisions. Accession would in fact strengthen Switzerland’s independence firstly by enabling the country to take part in decisions which concern it (it might adopt a joint approach with other Member States, depending on the circumstances and needs) and secondly because it could benefit from the substantial weight of the EU if efforts were made to exercise pressure on Switzerland.

If Switzerland became part of the EU, the Swiss people and possibly also the cantons could continue to exercise the people’s rights embodied in the Federal Constitution (referendum, initiative). As the Council of Ministers stressed in an

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answer to a parliamentary question on the compatibility of national referenda with the Community treaties, the organization of referenda is an exclusive preserve of the respective constitutional orders of the Member States. However, the outcome of a referendum must not be allowed to influence obligations arising under the treaties establishing the Communities. Studies by various Swiss universities have shown that, had Switzerland already been an EU Member since 1993, the number of concrete conflicts between Community law and referendum proposals at either Federal level or voting procedures at cantonal level would have been very small.

In 1991 – in the context of the EEA negotiations and also with a view to possible EU accession – the Federal Assembly adopted a statutory provision permitting the participation of Parliament in the area of external policy. On this basis, the Federal Council would, in the event of EU accession, systematically consult the Foreign Policy Committees before adopting its own position on acceptance of decisions of the Council of Ministers which would be directly applicable in Swiss law (regulations) or entail an amendment of Swiss legislation (directives). In this field too, it remains to be seen whether the existing procedures would be sufficient in the event of EU membership. At all events the Federal Council takes the view that accession would not weaken the role of Parliament or that of the cantons in our political system. The weight of the national parliaments of the EU Member States shows this to be possible.

As to the organization of justice, Switzerland would remain autonomous in the event of accession, save that its own procedural law would not be allowed to discriminate against Community law and threaten the legal validity of the latter.

In addition, Switzerland has always been well integrated into overall European cooperation in matters of civil and criminal law through the Hague Conference and the Council of Europe. As far as the Brussels Convention on the mutual recognition and enforcement of legal decisions of 1968 is concerned, the parallel Lugano Convention has so far guaranteed Switzerland’s integration into the legal area. If the cooperation can be continued in its existing form, there would therefore be no significant problems for Switzerland in these domains.

In the Federal Council’s view, internal constitutional policy measures would have to be considered in detail in the following areas in the event of EU accession:

• measures would have to be discussed with the cantons to enable them to play an appropriate part in the definition of the Swiss negotiating position at the time when accession negotiations begin. The extent to which the cantons could enforce their right of consultation in the negotiations, especially in cases where their own competencies are concerned, would also have to be determined.

• in the area of people’s rights, concrete proposals would have to be made

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in an explanatory statement on EU accession, defining the instruments by which the most evident cases of conflict could be resolved. It would also be necessary to examine how the involvement of the Federal Assembly in the definition of Switzerland’s negotiating positions on European policy could be ensured.

• the organization and working methods of the Federal Council and Federal Administration would have to be reviewed.

8.5.2 Prosperity

An attempt to assess the impact of EU accession on Swiss prosperity, shows – as is hardly surprising – that only the financial costs can be effectively calculated, while the impact on economic growth, prices, interest rates, wages, tax and rents can only be estimated. This is because economics are not an exact science and economic growth depends significantly on the parameter of private initiative by entrepreneurs, which cannot be measured, and on the development of the social environment (for instance the social partnership). The situation here resembles that prevailing in any economic risk analysis. The costs, which arise, are relatively easy to calculate, while the loss of profit caused by the slowness to take business opportunities can only be determined by comparative study and estimates. This conclusion, which the Federal Council already reached in the run-up to the EEA vote in 1992, means that the economic arguments for or against a change of the background conditions, i.e. in this case for or against EU accession, generally strengthen scepticism. The opponents of membership are able to set a relatively precise figure to the cost of the changes (e.g. an annual net payment to the EC budget of around 3 billion francs), while the advocates of liberal background conditions are only able to show trends, expectations and comparative values.

That being so, the following summary conclusions can be put forward:

• within the EU, and even within the same linguistic area, there are no significant population migrations;

• wage differences remain considerable and effective action to prevent abusive social dumping remains possible in the EU;

• thanks to EU accession, future economic growth would tend to be higher although this growth would also depend significantly on other factors such as internal reforms;

• in the present state of our knowledge, it can be assumed that EU accession would exceed the benefits of an EEA solution, even if the net transfer to the EU in the event of accession must be taken into account in this comparison;

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• the initial adaptation costs must therefore be seen against a more sustained and enhanced economic dynamic;

• the loss of monetary policy independence means that monetary policy can no longer build on a different economic development; other mechanisms of adaptation, such as flexible prices and wages, would also be needed;

• the adaptation requirements – adjustment to the real interest rates prevailing in Europe or agricultural measures – must not be underestimated;

• preparatory and accompanying steps must therefore be decided and transitional periods stipulated in the negotiations at domestic level;

• the inevitable conversion of State revenue and spending would of course also constitute a complex political venture.

• The proposals would obviously have to satisfy the following conditions:

o annual net payments to the EU would be financed by additional revenue from the indispensable increase in the standard rate of VAT which would in turn bring higher state revenue

o the attractiveness of Switzerland as a business location from the tax angle could only be safeguarded by extensive compensation of the higher rate of VAT in other areas, such as income tax and social security contributions

o the conversion of the tax system would have to be economically acceptable and viable in terms of social compatibility.

In principle, it must be remembered that accession cannot be seen as the panacea for all our economic problems. But it would be equally misguided to suppose that strictly internal measures could offset the economic drawbacks of standing aside from integration policy. Economic dynamism is particularly likely if an outward-looking economic policy goes hand in hand with continued internal reform.

In the welfare sector, the Federal Council would make a further study of the following internal measures in event of accession:

• Action already existing in the draft stage to prevent social and wage dumping. These measures have been drawn up by a working group with the participation of the social partners and will shortly be laid open to consultation by the Federal Council to enable preparations for implementation of negotiated solutions to be put in hand in the framework of the sectoral conventions in Switzerland

• In the area of agricultural policy, the steps already taken by the Federal Council to improve competitiveness will be continued; measures must also be verified to compensate the inevitable structural adaptations

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• The conversion of the Swiss tax system which will be rendered necessary by possible EU accession and the efforts to coordinate financial policy more effectively with a view to compliance with the Maastricht criteria at the different policy levels in Switzerland, including social insurance, would be a matter for consideration by the political system in Switzerland in the next few years. The Federal Council has in mind to approach the question of compensation of additional revenue from the higher rate of VAT on the occasion of the renewal of the financial regulation, which expires in the year 2006. Decisive criteria for the measures to be chosen would be economic and social compatibility and the preservation of the financial autonomy of the Federal and cantonal authorities.

8.5.3 Switzerland’s Position in the world

There is no doubt that EU membership is legally compatible with the status of permanent neutrality. With the external and security policy of the EU in its present form, Switzerland could preserve its neutrality even as a EU Member.

The question as to the preservation of Swiss neutrality would only arise if the EU States were one day to create a common defence and security structure by a unanimous decision. As an EU Member, Switzerland would have to play an active part in the creation of such a system and would be fully involved in the decision-making process. If a European security architecture were to be created which would offer Swiss citizens at least as much security as armed neutrality, the latter might become meaningless.

In the security policy sphere, and regardless of possible EU accession, Switzerland will find it necessary to redefine some of the conditions underlying its existing policy. The Federal Council has therefore commissioned a security policy report for 1999. The reorientation of Swiss security policy will presumably entail reforms, which will improve the ability of Switzerland to shape the joint external and security policy of the EU.

From the external economic policy standpoint, Switzerland could continue to defend its economic interests even after EU accession and help to shape the external trade policy of an economic world power as a Member enjoying equal rights to all the others

8.5.4 Internal security

If Switzerland does not wish to become a bolt hole for criminals who are wanted all over Europe or a hub and logistic base for international criminal organizations acting from Switzerland – in short an island of insecurity – it must seek still

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closer international cooperation to counter this threat. That is also in the interest of the EU. One step in this direction consists of bilateral police cooperation treaties already negotiated with neighbouring countries or under negotiation today. The same goal is pursued by the police liaison officers stationed at certain focal points of international crime. But these instruments on their own are inadequate compensation for the institutional deficit and reduced access to information.

Whether the EU Member States will be willing, after the entry into force of the Amsterdam Treaty, to open negotiations with Switzerland on internal security cannot be predicted at this juncture. Existing experience shows that such negotiations will be difficult, time-consuming and carry a price in terms of sovereignty. It seems likely therefore that EU accession would be the best means of fully making good Switzerland’s security deficit. This could be achieved by participation of Switzerland in the Schengen information system and cooperation at Federal level by appropriate central agencies in Europol.

On the subject of asylum seekers, non-accession would have the consequence that, because of the increasingly close cooperation prevailing between the EU Member States, Switzerland might become a place of first refuge for second asylum seekers in Western Europe. That would lead to a massive increase in asylum requests and entail very high extra costs.

In the area of internal security and asylum, the Federal Council will be examining how, in the event of accession, the disappearance of Swiss border controls could be compensated by internal measures. Border controls might be replaced by controls in the area close to the frontier (secondary searches, as they are known). A Federal body might be set up for certain specific interventions while the staff and material resources of the cantonal police forces might be increased. An adaptation of that kind could be achieved without any fundamental change to the existing system.

8.5.5 Contribution of Switzerland to the economic and social cohesion of the enlarged EU The enlargement of the European Union (EU) represents a major step towards securing peace, stability and prosperity in Europe, from which Switzerland will also profit. To support this process, which is also in Switzerland's interest, the Federal Council has decided to make a contribution to the economic and social cohesion of the enlarged EU. The Swiss contribution amounts to CHF 1 billion over a period of five years. With this cohesion contribution, Switzerland is continuing its tradition of solidarity with Eastern Europe and is contributing

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toward lessening the economic and social gap between the old and the new member states of the EU. Switzerland shall support specific projects in different areas. They will be chosen and carried out autonomous by Switzerland. The financing will not affect the budget.

8.5.6 Reasons for and against EU accession

The following compilation of advantages and drawbacks of Swiss accession to the European Union can only be a guide to help each Swiss citizen to weigh up the respective interests at his or her own individual level. Working with its own overview which focuses less on particular interests than on the overall well being of Switzerland itself, the Federal Council wishes to give guidance by highlighting the key issues in a flood of information.

The question of Swiss accession to the EU is essentially one of constitutional policy, which also has economic, population and peace policy aspects. For many European States, EU accession is the right strategy to secure lasting peace, economic prosperity and co-decision rights on matters of continental importance.

In our present state of knowledge, the costs of EU accession can be estimated at about 3.1 to 3.9 billion francs annually. This must be set against a loss of decision-making autonomy and freedom of action. Benefits of accession to Switzerland as an economic location (especially for the production of goods and tourist services) are probable in the long term, but cannot be proved at this juncture. Better education and job opportunities for our young people, researchers, cultural creators and job seekers also weigh favourably in the balance as do the mechanisms of solidarity between the Member States to resist attempts by non-European authorities to exert pressure on Switzerland. Another factor in favour of accession is that Switzerland would have to be an EU member to enjoy equal rights with the overwhelming majority of European States to seek solutions to problems and reach decisions which can best be resolved on the continental level (liberal and social internal market conditions, continental freedom of movement for persons, business ventures and ideas, effective action against crime, fair distribution of burdens in the refugee sector, worldwide representation of European basic values). This benefit must be set against the drawback that the positions represented by Switzerland on these matters may be outvoted and that some of the institutional particularities of Switzerland which are so dear to Swiss citizens (people’s rights, Federal balance, tax system, numerically small government) may be affected or limited and have to be adapted to the changed circumstances.

A factor in favour of early EU membership is that some important questions for

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our country have not yet been settled in the EU (central matters of security, tax competition, social order and EU institutional framework). Switzerland could therefore provide inputs for future decisions. On the other hand, Switzerland would have to accept the fact that most matters of cross border economic law have already been settled in the EU and that law is made by majority voting in the remaining areas. Switzerland would of course take part in those votes. Another factor in favour of accession is that introduction of the single currency (the euro) after a transitional period, which would have to be negotiated will result in lower transaction costs and put an end to the risk of harmful speculation on the Swiss franc. On the other hand, in the first instance, some painful adaptation costs would have to be accepted, for instance in the form of higher interest and rental costs and also in the shape of wage and price reductions.

Accession would probably be conducive to a more equitable distribution of burdens in asylum policy and would also result in the disappearance of checks on persons and goods at the national border; problems of internal security would then have to be countered by effective European police cooperation (joint control of the EU’s external frontiers, Europol).

Accession to the EU would be detrimental to the extent that Switzerland, like all the other EU States, would lose its right to conclude separate trade agreements with non-European countries. On the other hand, Switzerland would profit from the economic strength of the EU, which concludes such trade agreements on behalf of its Member States.

The citizens would enjoy greater legal protection as they could enforce the rights granted to them by European Community law in the ordinary courts. They would also have certain rights of appeal to the EU Court of Justice against some measures taken by European Community bodies.

Like some commercial activities and services, which have been protected so far against foreign competition, our agriculture would lose its protection in relation to the EU. The prices paid for products and services would fall. On the other hand, the means of production imported from other European countries would become cheaper and the market for Swiss high quality products would be greatly enlarged. The process of structural adaptation of Swiss agriculture will continue in any case, with or without EU accession. However, EU accession would require certain transitional periods because of the extensive adjustments necessary in agriculture. The conversion to 15% VAT would bring substantial extra revenue to the Federal Authorities (over 15 billion francs annually, disregarding the impact of any VAT increases in the context of the 11th AHV Review). Depending on the short-term economic situation, this might prove prejudicial to economic growth in Switzerland and would have to be

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compensated by a reduction of other State burdens on the population (such as direct taxation, social charges). The accompanying increase in the State share and the related restructuring of the Swiss tax system would lead to severe internal policy controversy.

EU accession would have no impact on the preservation of Swiss neutrality, as the examples of Finland and Austria prove. By staying neutral, Switzerland would undertake when it joins the Union to participate in the creation of a comprehensive continental security system and would ultimately gain a security margin from that system. However, it could preserve its position in situations with a critical bearing on neutrality by exercising the constructive right of abstention.

In weighing up the overall interests, the Federal Council identifies another important consideration: Swiss accession to the EU would promote national cohesion and the country’s influence beyond its borders, while the representation of State interests could be substantially improved by taking a seat on the many multilateral bodies of the European Union. The apparatus of the State and the density of regulation would hardly increase. On the contrary they would tend to diminish and the policy of openness to Europe which EU accession implies, would increase the pressure of competition and therefore promote the reforms and revitalization of national strength that are necessary internally.

8.6 Bilateral agreements i between switzerland and the european union of 1999

Agreed at the political level in December 1998 at a meeting in Vienna, the sector-specific bilateral agreements between Switzerland and the European Union cover seven areas: civil aviation, overland transport, the free movement of persons, research, public procurement markets, agriculture and the elimination of technical barriers to trade. The most distinctive feature of these agreements is the fact that they are thus limited to specific areas. It is for this reason that they are frequently referred to as "sector-specific" agreements. The seven agreements were initialled in Berne on 26 February 1999 and signed in Luxembourg on 21 June 1999. In the following they had to be ratified by Switzerland and the EU, the agreement on free movement of persons additionally by every EU-member state. After the completion of this process of ratification the seven agreements have come into force on 1 June 2002. The agreements can be terminated at anytime.

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8.6.1 Research The research agreement allows Swiss research establishments to participate on an equal footing in all programmes and activities of the fifth Framework Research Programme (FRP) of the European Commission and the fifth Euratom framework programme. However, as the agreement will already expire on 31 December 2002, its financial provisions, which apply from 1 January of the year following the entry into force of the bilateral agreements, will not be able to take effect. This in turn means that the research agreement will not take full effect even after its entry into force in the first half of 2002. However, the agreement does provide for the possibility of renewal to allow full participation by Switzerland in the sixth EU framework programme (2003-2006). After its entry into force, renewal negotiations will therefore be opened between Switzerland and the EU. 8.6.2 Public procurement The World Trade Organisation (WTO) agreement in the area of public procurement has been in force since January 1 1996. The federal government, the cantons and public law companies active in the water, transport and energy sectors must comply with WTO rules on tendering and the signing of contracts for goods, services and construction, if these go beyond certain thresholds. The WTO agreement served as the basis for the agreement on public procurement markets between Switzerland and the EU, which involves an even broader range of applications than in the case of the WTO text. The procurement of local authorities, the telecommunications and rail transport sectors and the procurements of private enterprises operating on the basis of concessions or an exclusive right are thereby liberalised if the agreed thresholds are exceeded. 8.6.3 Technical barriers to trade The agreement calls for the mutual recognition of declarations of conformity (tests, certificates, product approvals etc.) for most industrial products. To the extent that Swiss legislation is recognised as being the equivalent of EU legislation, a single test of conformity will henceforth be sufficient for commercialisation of the products in question in the markets of both Switzerland and the EU. Duplicate testing to establish conformity to specific Swiss or EU requirements will no longer be necessary. In cases where Swiss specifications differ from those of the EU, further testing will remain necessary, in the one case to demonstrate conformity with Swiss legal requirements and in the other conformity with EU laws. In both cases

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however Swiss certification bodies may now carry out the tests. 8.6.4 Agriculture The agricultural agreement between Switzerland and the EU will make it much easier to conduct trade in agricultural produce by reducing or even eliminating non-tariff barriers, through mutual recognition of technical requirements in the veterinary field, in pesticides and similar products, in "bio" agriculture, in relation to quality standards for fruit and vegetables, and so on. The agreement calls for improved access to the agricultural markets of each party for products of particular interest. As negotiated, the agreement would open the EU market to some of the most competitive Swiss products including fruit and vegetables. For cheese, free trade will be introduced five years after the date of entry into force. This is in Switzerland’s interest because it exports more cheese than it imports. Switzerland has agreed to make concessions for fruit and vegetables during the period when there is no harvest (winter) and for items that are not produced in Switzerland, or at least not in appreciable quantities (e.g. olive oil). Fresh meat, wheat and milk on the other hand are not affected by the removal of customs duties. The agreement necessitates a supplement to Swiss agricultural policy, which requires a stronger market-led strategy on the part of farmers. In an effort to make Swiss agriculture more competitive, the federal government has provided for certain companion measures, designed above all to "help farmers to help themselves" when it comes to bringing their produce to market. 8.6.5 Civil aviation The agreement defines the terms by which Swiss airlines will be allowed access to the deregulated European civil aviation market on a reciprocal basis. The gradual acquisition of transport rights* and the prohibiting of discrimination will put Swiss airlines virtually on an equal footing with the companies of Europe, making it possible for them to become majority shareholders in other EU airlines. 8.6.6 Overland transport The agreement in the area of overland transport calls on both parties to work for the creation of a co-ordinated policy in this field. Some aspects of this agreement involve improving conditions for mobility, environmental protection, comparability of general conditions, and the guarantee of the most direct transit

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routes possible. The accord includes provisions for gradual opening by Switzerland and the European Union of their respective road and rail transport markets, for both persons and goods, on a reciprocal basis. It provides for a transitional period for road traffic, which ends in the year 2005, with a definite arrangement to be in place by 2008 at the latest. The overland transport agreement is one of the main pillars of Switzerland's transport policy. It is the basis on which Switzerland plans to reorganise its railways, in co-ordination with Europe, developing new infrastructure (New Transalpine Railway, "NEAT" + traffic upstream and downstream) while introducing a new tax on heavy goods vehicles (HGVs) based on the kilometres travelled, while increasing transit taxes to levels considerably higher than those existing at present. In an effort to implement the provisions of the constitutional article on the protection of the Alps, the Swiss government and parliament decided on a series of companion measures aimed at reducing the volume of goods traffic crossing the Alps by road to about 650,000 passages per annum. In effect this would amount to a 50 per cent reduction in HGV traffic compared to the situation today. 8.6.7 Free movement of persons The agreement on freedom of movement between Switzerland and the EU provides for the progressive opening of the employment market. After seven years, Switzerland can decide whether it wishes to extend the agreement. This decision will be the subject of an optional referendum. The agreement covers workers of all kinds, the self-employed and persons without gainful employment who have sufficient financial means of their own. On entry into force of the agreement on freedom of movement, persons in gainful employment and the self-employed only benefit directly from the rights granted if at that time they are already authorized to pursue an employment activity on the territory of the contracting parties. Persons who wish to take up employment on the territory of the other contracting party will only benefit from freedom of personal movement two years after the entry into force of the agreement. For employed persons from the EU the transition to free movement will take place in several stages extending over a period of 12 years. The agreement on the freedom of movement is supplemented by mutual

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recognition of professional diplomas and coordination of social insurance. To prevent abuse of the freedom of movement of persons, the federal government and parliament have taken accompanying measures to protect Swiss employees against wage dumping. The advantages include the opportunity of living and working freely anywhere in Europe, the know-how acquired as a result of participation in European research programmes, the improvement in relations between Switzerland and the European Union, and the guarantees given by the latter for Switzerland's environment policy, all of which are factors that are of inestimable value. The economic advantages have been estimated as equal to about 2 per cent of the gross domestic product (GDP), i.e. about SFr8 billion. This includes the anticipated price reductions of benefit to consumers. For example the Swiss sector that includes machine manufacturing, electrical and metallurgical products expects to increase its turnover by some SFr300 million each year thanks to the bilateral agreements. This figure has been calculated taking the following into account:

• The volume of additional orders from public procurement markets

• The ability to make unlimited use of the outcomes of European research programmes

• Greater flexibility in the utilisation of employees

• The growing competitiveness of Swiss products following the elimination of costly technical barriers to trade.

Once the seven-year transitional period comes to an end, the total cost will amount to SFr350-450 million each for the Swiss Confederation and for the social security service, i.e. about 0.2 per cent of GDP. These figures are maximum values based on pessimistic assumptions (high unemployment rate). In fact these costs will be considerably less if the economy grows at a good rate. Each percentage point of additional growth will bring an extra SFr400-500 million into the coffers of the Swiss Confederation. The gains would be even greater in the cantons, whose tax revenues are significantly higher. 8.6.8 Legal and institutional framework The seven agreements are all inextricably linked together, with the exception of special provisions for the agreement on research. The agreements have been concluded and approved as a whole, to take effect simultaneously. The extinguishment of a single agreement would automatically render the others

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inapplicable. The agreements can be separated into three categories: the five agreements that involve deregulation, one based on co-operation (in research) and a partial integration agreement (civil aviation). Another difference is that, unlike the six other accords the civil aviation agreement extends the so-called acquis communautaire (existing Community legislation) to Switzerland. All the seven agreements will be supervised by joint committees, within which each of the two parties must make rulings on a unanimous basis. These joint committees only have decision-making powers in the cases stipulated in the agreements. Each party is responsible for the proper application of the agreements on its own territory. However, the European Commission and the European Court of Justice monitor compliance with the rules of competition in the area of civil aviation. None of the seven agreements involves a transfer of legislative powers to a supranational body. The majority are based on the mutual recognition of each other's legislation by the two contracting partners. It is in the interest of both parties to maintain this legislative equivalence. It is with this in mind that specific procedures have been laid down for the exchange of information and for consultations when one party intends to amend its regulations.

8.7 Blateral agreements ii Switzerland – EU (as of February 2005)

The Bilateral Negotiations II are the continuation of the Bilateral Agreements I 1999 and thus constitute further progression along the bilateral path. This was pursued after rejection of Switzerland’s accession to the European Economic Area in 1992: It involves on the one hand the pragmatic settlement of outstanding specific interests and problems in the relationship between Switzerland and the EU through bilateral, sector-specific negotiations and agreements, and on the other hand involves improving on and structuring the existing treaty framework where this is in both sides’ interest. After conclusion of the Bilateral Agreements I, the EU-Commission was essentially sceptical regarding new negotiations with Switzerland. The reason why, despite this scepticism, a second round of bilateral talks has come about, is because the EU itself discovered two fresh concerns: Firstly, Switzerland should be integrated into the system planned by the EU for cross-border taxation of savings. Secondly, Brussels wanted to increase cooperation with Switzerland with regard to the fight against fraud in the area of indirect taxes (especially against

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cigarette smuggling). 8.7.1 Parallelism of negotiations Switzerland acceded to the requests made by the EU, but also set three conditions:

1. Negotiations should not only be conducted in the two dossiers required by the EU, but should also extend to cover additional areas of importance for Switzerland: These include Switzerland’s participation in Schengen/Dublin (cooperation in the fields of police and justice, asylum and migration) and the seven remaining dossiers (“leftovers”) from Bilateral Negotiations I. In a joint statement on the Bilateral Negotiations I, Switzerland and the EU had already come to an agreement on negotiations in the following areas: processed agricultural products, statistics, the environment, Media, education, pensions and services.

2. Negotiations proceeded in parallel in all dossiers and were concluded simultaneously. This parallelism of negotiations ensured that a balanced overall outcome was achieved that also took account of Swiss interests.

3. Switzerland’s interests as a financial centre, i.e. banking secrecy, must be protected at all times.

From June 2002 negotiations between Switzerland and the EU were conducted in parallel for ten dossiers: On the one hand, these concern economic interests (e.g. of the food industry, the financial centre or tourism). But they also extend to cover the cooperation between Switzerland and the EU in other crucial political areas: e.g. domestic security and asylum policy (Schengen/Dublin) or in areas such as the environment, statistics, culture and training. With regard to the dossier concerning the liberalisation of services, Switzerland and the EU agreed in March 2003 that, in view of the large number of issues still outstanding and the complexity of the dossier, negotiations in this area will be continued separately and concluded at a later date. In the summer of 2003, seven of the remaining nine dossiers of the Bilateral Negotiations II were essentially completed: taxation of savings as well as the six leftovers. An important step was taken in June 2003 with the political agreement with regard to the taxation of savings. The agreement is based on the principle that Switzerland imposes a withholding tax of up to 35% on behalf of the EU states and pays back three quarters of this to the EU states. This means that, on the one hand income from savings received by EU citizens can be taxed efficiently in Switzerland, whilst the Swiss legal system and banking secrecy remain protected.

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Politically sensitive differences were still outstanding in the closing phase for the dossiers relating to the fight against fraud and Schengen/Dublin. These concerned the question of the exchange of information with regard to tax offences within the scope of judicial and administrative assistance. 8.7.2 Political agreement On May 19th, at a summit meeting between Switzerland and the EU in Brussels, political agreement was also reached with regard to these final questions. Agreement on the final points consists of the following provisions:

• With regard to Schengen/Dublin, Switzerland receives the guarantee that, in the area of direct taxes, banking secrecy remains protected. In the event that a future Schengen provision revokes the principle of double liability with regard to direct tax offences thus giving rise to an obligation for legal assistance with regard to evasion offences, Switzerland receives, an opt out without the need to withdraw from the Schengen cooperation.

• In the area of fight against fraud, i.e. matters relating to indirect taxes (customs duty, VAT, excise duty, for example on tobacco and alcohol) Switzerland makes available the same legal instruments to the EU as those used in Swiss proceedings (national treatment); i.e. cooperation is extended to include all cases involving serious offences. Cooperation with regard to cases of money laundering is also extended. However the definition of money laundering according to the Swiss criminal code remains unchanged. There are no new reporting requirements for Swiss financial intermediaries.

8.7.3 Balanced overall result The Swiss Federal Council considers this agreement to be well balanced, with Switzerland’s key requirements (conclusion of all dossiers including Schengen/Dublin, protection of banking secrecy) being fulfilled. Switzerland provides reciprocal cooperation with regard to cross-border taxation of savings by deducting a withholding tax on income from savings earned by EU citizens (taxation of savings). Swiss cooperation is also extended to cover all serious offences relating to indirect taxation (smuggling, customs fraud, VAT fraud) (fight against fraud). The bilateral agreements provide Switzerland with the following benefits: Firstly, the agreements cover significant economic interests:

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• Finance sector: The interests of the Swiss finance sector are protected (taxation of savings, fight against fraud), and banking confidentiality in relation to direct taxation is preserved (Schengen/Dublin).

• Food industry: Reduced customs duties improve export opportunities for the food industry. This also benefits Swiss agriculture as a supplier (processed agricultural products).

• Tourism: The Schengen visa encourages tourism in Switzerland (Schengen/Dublin).

• Tax benefits for holdings: Swiss holdings operating throughout Europe pay less tax (taxation of savings).

Secondly, cooperation is extended to other important political areas:

• Security policy: Cross-border crime can only be fought effectively by - Security policy: Cross-border crime can only be fought effectively by means of international police and judicial cooperation. Schengen provides the tools for this purpose.

• Asylum policy: The Dublin cooperation offers measures against “asylum tourism” and thus relieves pressure on the national asylum system.

• Environment: The European Environmental Agency is an important means for international cooperation on protection of the environment. By being a member of the Environmental Agency, Switzerland can contribute towards this cooperation.

• Statistics: Broad-based statistical information is essential to support key political and economic decisions. The statistical agreement harmonises and optimises the exchange of comparable statistical data between Switzerland and the EU.

• Culture: Participation in the EU film promotion programmes (MEDIA) strengthens the role of film as an important part of Swiss cultural heritage.

• Education: Cooperation within EU training programmes provides access to a wide range of training for Swiss nationals, and increases the quality of training. This provides improved opportunities in the employment market.

8.7.4 Next steps: Signature and approval There are nine negotiation results ensuing from the Bilateral Negotiations II. Eight of these are agreements (processed agricultural products, statistics, pensions, environment, media, Schengen/Dublin, fight against fraud, taxation of savings), which need to be approved by Parliament. Three of the agreements (MEDIA, Schengen/Dublin and taxation of savings) require amendments to legislation in order to be implemented. The ninth negotiation result (Education/vocational training/youth) consists of a declaration of intent.

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The Swiss Federal Council will submit the agreements as separate proposals to Parliament. However, the agreements shall be submitted to Parliament collectively. At the same time the Federal Council submits the application for an accelerated parliamentary approval process. The agreements should be discussed in both councils in the same session. The Federal Council also submits seven of the Bilateral Agreements II (statistics, pensions, environment, media, Schengen/Dublin, fight against fraud, taxation of savings) to the optional referendum in accordance with Article 141 of the Federal Constitution. The Federal Council bases this recommendation to Parliament on the constitutional clarifications provided by the interdepartmental “approval process” work group led by the Federal Office of Justice. The agreement concerning processed agricultural products does not meet the requirements for the optional referendum, as it is merely an adaptation of the existing protocol 2 of the 1972 Free Trade Agreement. None of the agreements meet the constitutional criteria for submission to the compulsory referendum (Article 140 of the Federal Constitution). This would require accession to a supranational community or organisation for collective security. Nor are these conditions fulfilled with regard to the Schengen/Dublin association agreement. Switzerland’s participation in Schengen does not amount to accession to a supranational community, but is instead a normal contract covering international cooperation. On the basis of the negotiation results achieved, it will only be possible for Switzerland to adopt any future Schengen law after conclusion of a new contract under international law. This requires each time a new Swiss approval process each time (Federal Council, Parliament, Referendum). Consequently no transfer of sovereignty to a supranational community takes place. Failure to adopt any new Schengen law would ultimately result in certain termination of the agreement. On 25th June 2004 the agreements were initialled and then underwent consultation procedures. The results of this clearly showed that Bilaterals II were supported unanimously by industry, and by the majority of parties, organisations and federations. The cantons, too, were unanimous in their support. The agreements were strongly rejected only by the Swiss People’s Party (SVP). The Federal Democratic Union (EDU) and the Campaign for an Independent and Neutral Switzerland (AUNS) expressed opposition to Schengen/Dublin. Numerous shooting associations criticised the proposed changes in weapons laws, and the Federal Council has dealt with the main concerns by amending its proposed amendments to the Swiss Weapons Act. The Federal Council issued the message on Bilaterals II on 1 October 2004, and

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the agreement was signed in Luxembourg on 26 October 2004. Parliament debated the message and the agreement during the winter session: All the agreements were accepted in the National Council with a clear majority, and in the Council of States, with the exception of Schengen/Dublin, the result was unanimous. The Schengen/Dublin association agreement met with somewhat more resistance. In the National Council, this agreement was accepted with 129 votes in favour and 60 votes against it and in the Council of States, with 36 votes in favour and 3 votes against it. In line with the application of the Federal Council, the Federal Assembly will submit seven agreements (statistics, pensions, environment, media, Schengen/Dublin, fight against fraud, taxation of savings) for the optional treaty referendum. None of the agreements shall be submitted for imputation of the compulsory referendum. The countdown for the referendum started with the publication of the Federal decrees on December 21, 2004, in the federal journal. The deadline for the referendum is March 31. The earliest possible date for a vote is June 5, 2005. 8.7.5 Overview of Bilateral Agreements II Switzerland - EU

• Cooperation in the fields of justice, police, asylum and migration (Schengen/Dublin)

• Taxation of savings

• Fight against fraud

• Processed agricultural products

• Environment

• Statistics

• MEDIA

• Education, occupational training, youth

• Pensions 8.7.5.1 ooperation in the fields of police, justice, asylum and migration (Schengen/Dublin) Criminals who are specifically choosing to operate across national borders commit an increasing number of crimes. This development presents new challenges for security measures tailored to individual countries, and calls for greater international cooperation. The individual countries also face a similar challenge in combating illegal immigration and coping with asylum migration.

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The EU is Switzerland’s most important partner in these areas. For some time the EU has been promoting determined and well-targeted cooperation for security and migration. Central to this cooperation is the Schengen/Dublin security and asylum system, in which Norway and Iceland, non-Member States of the EU, have also been participating since 1999. With a bilateral agreement to Schengen/Dublin, Switzerland will have access to the instruments for cooperation on security and asylum within the EU.

• Schengen promotes free movement of person’s traffic by essentially removing controls on persons at the internal boarders of the EU. At the same time as reinforcing internal security, controls on external borders of the “Schengen area” are tightened and cross-border cooperation between police forces and judicial authorities within Schengen states is strengthened. Connection to the Schengen Information System (SIS), the pan-European electronic investigation database, is particularly important for Switzerland. This has proved to be an efficient means of fighting cross-border crime (such as illicit smuggling of migrants, and also the trafficking of persons, drugs and arms). The ability to exchange information rapidly by computer has increased the effectiveness of inspections and of international arrest warrants. Legal assistance is also regulated within the scope of Schengen cooperation. A special provision ensures that Swiss banking secrecy is protected with regard to direct taxes. Switzerland does not have formal co-decision rights in relation to future Schengen law, but it does have extensive possibilities to participate in the decision shaping process. However, new laws are not adopted until they have been approved under the Swiss legislation process, consisting of the Federal Council, parliamentary approval and a referendum if necessary. Failure to adopt a legal act could ultimately result in termination of the agreement, so Swiss sovereignty is thus preserved.

• The Dublin cooperation lays the foundation for sharing the burden of

managing asylum migration fairly, efficiently and equally. Only one EU state is ever responsible for conducting the procedures relating to an asylum case. The state responsible is determined by means of various criteria, this in turn ensures the right to an asylum hearing. The tendency towards countries trying to reduce the attraction they hold for asylum seekers in relation to other countries can be moderated. At the same time the burden is reduced from national asylum systems. Thanks to the electronic database, EURODAC, which stores and identifies the fingerprints of asylum seekers, repeated applications can be identified and the applicant can be repatriated to the state responsible for the asylum proceedings. Asylum proceedings due to “asylum shopping” are inefficient and cost-intensive. With Dublin, their number can be reduced. According to unofficial estimates, currently around every fifth application in

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Switzerland is a second application. By participating in Dublin, the burden on the Swiss asylum system would be significantly reduced. At the same time, a participation in Dublin would help to prevent a further tightening of Swiss asylum law. By not participating in Dublin, the reverse would be true. Switzerland would be the sole second port of call for asylum applications in western Europe and it would need to be prepared for an increase in asylum applications, and therefore in additional costs.

8.7.5.2 Taxation of savings The Federal Council has always shared the viewpoint of the EU, that income from savings should be taxed appropriately. It stresses that it is not in Switzerland’s interest to attract businesses that are seeking to avoid the planned EU regulation for cross-border taxation of savings. For this reason, Switzerland has already declared that it will use its legal system to make its financial centre unattractive for these types of financial transactions. However, this is on condition that the EU introduces an efficient system for the taxation of all income from savings. Furthermore, this system should not just apply to Member States and their dependent or associated territories, but also to the relevant financial centres outside the EU. Under the agreement negotiated with the EU, Switzerland undertakes to impose a withholding tax on all income from savings originating abroad, which will be effective for natural persons with tax residency in an EU Member State. This withholding tax increases progressively up to 35%. It can be replaced by a voluntary disclosure of the interest payment, on the express advice of the person receiving the interest, to the revenue authorities of the country of domicile for tax purposes. In addition, Switzerland undertakes to provide administrative assistance on request to the EU Member States in cases of tax fraud or similar serious offences. There will be no automatic exchange of information between tax authorities. With the withholding tax model, Switzerland can be sure on the one hand that the EU directives for the taxation of savings cannot be avoided by using Switzerland. On the other hand, the Swiss legal system and banking secrecy remain protected. The agreement also provides for the abolition of tax on payments of dividends, interest and licence fees between affiliated companies.

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8.7.5.3 Fight against fraud The agreement on combating fraud aims for more intensive cooperation against smuggling and other types of offences, in the areas of indirect taxes (customs duty, value added tax, consumer tax), and subsidies as well as in public procurement. With this in mind, administrative and legal assistance will be organised more effectively and the exchange of information with administrative and legal authorities in the EU strengthened. Stronger cooperation against criminal activity is as much a benefit for the EU as it is for Switzerland. The EU benefits by being able to conduct the fight against cigarette smuggling and other fraudulent activity more efficiently, thereby avoiding revenue losses. Switzerland benefits as its financial centre has no desire to be abused as a hub for fraudulent business activities. 8.7.5.4 Processed agricultural products The agreement on processed agricultural products satisfies one of Switzerland’s main economic interests within the second series of bilateral negotiations: In future, companies within the Swiss food industry will be able to make duty-free exports of a wide range of products to the EU market. For Swiss agriculture, this improved competitiveness for the food processing industry opens up new opportunities. And prices for the consumer will tend to fall as a result of stronger competition. Processed agricultural products (e.g. chocolate, biscuits, soups, sauces, pasta, instant coffee) occupy a unique place between industry and agriculture, in so far as they consist partly of agricultural raw material and partly of an industrially manufactured product. Customs duties have already been abolished on the manufactured part of the product. On the agricultural part, the “raw material handicap” can be compensated by means of a price compensation mechanism. That means that competitive disadvantages due to large differences in the price of raw materials can be compensated by customs duties and export subsidies at the level of the price differences. The bilateral agreement on processed agricultural products results in the following improvements:

• Revision of the price compensation mechanism: As part of a simplified price compensation mechanism, the EU undertakes to completely abolish its customs duties on Swiss products and also to waive export subsidies. For its part, Switzerland will reduce its customs duties and export subsidies or, in certain cases, will likewise abolish them completely.

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• Extension and revision of scope of application: The range of products covered by the agreement has been extended.

8.7.5.5 Environment The European Environmental Agency (EEA; founded at the beginning of the 1990s) is responsible for gathering and analysing data on the state of the environment in European countries, as well as ensuring that this data is comparable. The EEA thus provides the scientific basis for a sound EU environmental policy. In view of the cross-border nature of environmental risks, the EEA has become a key instrument for cooperation on environmental policy between the European states. Closer cooperation in environmental matters through Switzerland’s membership of the European Environmental Agency is the subject of an environmental agreement between Switzerland and the EU. Switzerland can thus increase its commitment to environmental protection at a European level. Until now, Switzerland has only participated informally in EEA activities, on the basis of selective participation in projects. Membership of the EEA means Switzerland will actively participate in organising projects and research at a European level, gain full access to the EEA’s pan-European comparable environmental data and, for its part, will be able to submit comparable Swiss data as a basis for an effective environmental policy. 8.7.5.6 Statistics As the world we live in becomes more and more complex, statistical data becomes an increasingly indispensable basis of information for well-founded decisions. Statistics play a major part in providing a source of factual, reliable and relevant information in politics and the economy, as well as in day-to-day life. Eurostat, the Statistical Office of the European Union (EU) is responsible at a European level for gathering and publishing data supplied by the national statistical institutes. Eurostat is also responsible for the comparability and monitoring the comparability of national data on the basis of standard definitions and criteria for data collection. The bilateral agreement on cooperation in the area of statistics regulates the progressive harmonisation of statistical data collection between Switzerland and the EU. Comparability of Swiss and European data in such important areas as

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trade relations, the employment market, social security, transport and the environment is thus guaranteed in the medium term. Switzerland also gains improved access to data published in the EU and gains prominence in Europe, in so far as greater quantities of Swiss data are published in statistics compiled by Eurostat. 8.7.5.7 MEDIA One of the priorities within the EU audiovisual policy is the promotion of European films. The EU has set up the MEDIA promotion scheme to help European production overcome various difficulties in the face of non-European competition. The EU terminated Switzerland’s participation in this programme as third country after rejection of the EEA in 1992. The aim of an agreement for Switzerland to participate in both MEDIA programmes currently running (MEDIA Plus and MEDIA Training programmes) highlights Swiss interest in the cooperation to promote European audiovisual productions. Participation gives Swiss television programmes and filmmakers equal rights of benefit from EU support measures. The agreement grants full participation in the EU programmes – MEDIA Plus (promoting the creation and distribution of Community audiovisual works) and MEDIA Training programmes (training programmes for professionals in the EU audiovisual programme industry). Current Swiss legislation in the audiovisual field is already largely compatible with Europe, which satisfies a key requirement for participation in the MEDIA programmes. An amendment to Swiss legislation is necessary only in the matter relating to quotas for European productions, fixed at 50%. 8.7.5.8 Education, occupational training, youth The EU promotes the mobility of students, apprentices and young people within the framework of the Community programmes known as SOCRATES (general education), LEONARDO DA VINCI (occupational training) and YOUTH (extra-curricular work). These people can build their international experience at either an academic or a practical level through periods of residence abroad or cooperative projects under the education, vocational training and youth programmes. Not only does studying abroad enrich young people on a personal basis, it also improves their future prospects in the labour market. Over thirty countries currently participate in these three EU programmes. At the

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moment Switzerland is only able to participate on a project basis, supported by federal funds. It would like to raise this status, with participation to be legally established and thus guaranteed, which would grant equal rights to Swiss people participating in projects relating to the three programmes with regard to project initiatives and input to projects. Swiss participation in the current programmes (2000-2006) was not possible for the EU for legal reasons. For this reason the EU Council of Ministers and the European Commission have declared their intention to allow Switzerland to participate in the future generation of programmes (from 2007). In the meantime the current project-based cooperation will be consolidated. Switzerland and the EU have agreed in the form of an exchange of letters that both partners will have a high-level meeting once a year to set about consolidating cooperation as well as preparing for talks on full participation. 8.7.5.9 Pensions In the absence of an agreement between Switzerland and the EU on double taxation, pensions of retired EU officials living in Switzerland are taxed twice: The EU imposes a tax at source on pensions paid to retired officials and Switzerland subjects these people to income tax on the residual amount. Within the scope of the Bilateral Negotiations II, Switzerland waives this tax. However this tax exemption is only granted if the EU also effectively taxes income from pensions at source. This arrangement only affects around 50 pensioners.

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- ANNEX: STATISTICAL GRAPHICS -

Figure 41 : Comparison between Switzerland, the EU – 15 and new EU members: average annual growth rate 1994-2000 (in %)

Figure 42 : Swiss Imports and Exports 2002

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Figure 43 : Swiss direct investments in the EU-15 in CHF bn.

Figure 44 : Swiss direct investments from the EU-15 in Switzerland in CHF bn.

Figure 45 : Permanent foreign resident population in Switzerland; proportion (in

%) by nationality at the end of December 2002

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Map 40 : Trans-Alpine movements of Goods: Transit Routes

Table 35 : Foreign trade

Year Total in Million CHF

EU in %

EFTA in %

Germany in %

France in %

Italy in %

USA in %

Japan in %

Swiss Exports 1999 114445.5 62.6 0.5 23.3 9.4 8 11.4 3.6 2000 126549.1 62.6 0.5 23.3 9.4 8 11.4 3.6 2001 131717.1 61 0.5 22.2 9 8 10.6 3.9 2003 130380.5 60 0.4 20.8 9.2 8.3 11 3.8

Swiss Imports 1999 113415.6 79.7 0.3 32.5 12.5 10.2 6.1 3 2000 128615.3 79.7 0.3 32.5 12.5 10.2 6.1 3 2001 130052 79.9 0.3 32.2 11 10.2 5.3 2.4 2002 123125 80.4 0.2 32.3 10.4 10.8 5.3 2.1 Source : La vie économique; dec., 2003

Table 36 : Direct Investment

Swiss Investements Abroad Foreign Investment in switzerland

Year Total / million CHF

In Eu / in % Total / million CHF

In Eu / in %

1999 311 258 48.2 121 561 62.0 2000 381 910 48.8 142 055 59.5 2001 415 646 47.2 149 731 61.5 Source: La vie économique; dec., 2003

Table 37 : Manpower in Swiss Firms Abroad

Year Total EU / in% North America / in %

1999 1 640 957 48 17.8 2000 1 763 022 46 19.4 2001 1 718 681 44.3 19.5 Source : La vie économique; dec., 2003

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Table 38 : Commercial Exchange with the EU according to product categories 2001

Part commercial trade with the EU in % Products Exports Imports Agriculture and forestry 3.2 8 Chemical products 34.4 22.1 Metals 7.5 7.6 Machines 24.3 22.1 Precision instruments, watches, jewels 17.3 6.6 Source : La vie économique; dec., 2003

able 39 : Foreigners in Switzerland (12/2002)

Number In % Eu & EFTA 816 152 56.4 Serbia and Montenegro 198 092 13.7 Turkey 78 846 5.4 Others 354 222 24.5 Total 1 447 312 100 Source : La vie économique; dec., 2003

Table 40 : Swiss Citizens Aboard ( June 2002)

number In % EU 345 208 59.5 EFTA 5 902 1 USA 67 929 11.7 Canada 34 192 5.9 Australia 24 924 4.3 Others 102 241 17.6 Total 580 396 100 Source : La vie économique; dec., 2003

Table 41 : Growth of GNP in %

1997 1998 1999 2000 2001 2002 Switzerland 1.7 2.4 1.5 3.2 0.9 0.2 Germany 0.8 2 2 2.9 0.8 0.2 France 1.9 3.5 3.3 4.0 2.2 1.2 Italy 2.0 1.8 1.6 3.2 1.8 0.4 Great Britain 3.4 2.9 2.4 2.9 2.1 1.7 EU 2.6 3 1.2 3.1 1.8 1.1 USA 4.5 4.3 4.1 3.8 0.3 2.4 Japan 1.8 -1.1 0.1 2.8 0.4 0.1 OECD 3.6 2.4 3.1 3.9 0.8 1.8 Source : La vie économique; dec., 2003

Table 42 : Rate of Unemployment in % of Wage-Earners

1999 2000 2001 2002 Switzerland 2.7 2.0 1.9 2.8 Germany 10.5 9.6 9.4 9.8 France 10.8 9.5 8.7 9.0 EU 8.7 7.8 7.4 7.7 USA 4.2 4.0 4.8 5.8 Japan 4.7 4.7 5.0 5.4 OECD 6.7 6.3 6.5 7.0 Source : La vie économique; dec., 2003

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9. MOBILITIES IN WESTERN MEDITERRANEAN SEA: THE OTHER

GEOGRAPHIC CONTINUITY.

Mohamed Charef

M’Hammed Whabi

ORMES Université Ibn Zohr d’Agadir Maroc

9.1 Introduction

In this 3rd millennium beginning, Morocco faces strong changes in the migration pattern which are the consequences of an endogenous and exogenous paradox. Because of its specific geographical position, Morocco has to act more and more like a glacis at the European Union frontier. After being for years an emigration country, it tends to become an immigration one, but above all a transit space, like Mexico located on the United States border.

Some preliminary observations will lead us to evaluate the real issue of labour migration in Western Mediterranean Region and in Morocco in particular.

In the World, the number of migrants grew from 75 millions in 1960 to 100 millions in 1980 and finally reached 175 millions in 2000. The latest data proposed by the CMMI36 are 200 millions international migrants (only those that lived out of their country of origin for more than one year) and 9.2 millions of refugees. Those figures are equivalent to the population of Brazil. This report underlines the attractiveness of developed countries where the number of migrants grew from 48 millions in 1980 to 110 millions in 2000. Majority of migrants are in United States (35 millions), followed by the Russian Federation (13.3 millions), Germany (7.3 millions), Ukraine (6.9 millions) and India (6.3 millions). China is the country that sends the most numerous migrants with 35 millions Chinese abroad, followed by India (20 millions) and Philippines (7 millions). So, at the World level during the last four decades, the figures show the increase of migratory flows, even if they vary a lot between each macro-region. After the domination of South-North flows, the South-South flows increased during the 1980s. That is the consequence of the increasing number of

36 Les éléments ci-dessous sont transposés du site web : Migration in an interconnected world : New directions for action. Report of the Global Commission on International Migration (GCIM). 2005. Switzerland. 88

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political and “environmental refugees”37. According to the UNHRC in 2000, 5,473,000 refugees (among the 21,798,000 who are under its responsibility) are in Africa. Among them 3,627,000 are “refugees” and 1,846,000 are “displaced” persons.

African migrants go to Asia, United States but above all to Europe. The number of migrants of African origin in OECD countries is estimated at 7 million (2004) from 82 millions African migrants, i.e. 8.5%. Among those 7 millions, the migrants from Northern Africa are 3.2 millions (45%), which is very similar to the number of Asian migrants (3.1 millions). 94% of Sub-Saharan African migrants and 98 % of North African are concentrated in 10 countries. France gathers respectively 39% and 72% of them. The second country for the number of migrants from North African is Spain with 400 000 migrants. African migrants are numerous in United States and in United Kingdom (2 millions).

In the same time, the European Union tends to reduce the immigration flows by increasing the controls at the borders and the difficulties to obtain a visa. However, meanwhile, another trend encourages the migration of skilled migrants toward developed countries, leading to the brain drain of competent people from the less developed countries.

Without real migration policy, one could believe or fear that the closure of the borders would lead to limit the departures from emigration countries. However, considering the demographic and economic conditions in those countries and the growing disparities with developed countries, the departures would certainly be maintained if not increased.

More and more, the main factor of migration is the search of an employment.

That is true for Morocco and other sub-Saharan countries and particularly West African ones. A survey on Moroccan migrants (Hamdouch B., 2000) set out during the summer 1998, showed that it was the main reason for migration for 40% of migrants since 1975, (even if the number of departure because of family reunification, or upper academic studies increased). The figure was less that 17% before that date.

37 When the equilibrium is broken between the population and resources is durably broken, but also starvation and epidemics or other natural catastrophes.

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9.2 Moroccan migrants in Europe and in the World

Migratory movements have been for many years an important feature of the Moroccan socio-economic development, particularly for peripheral regions such as Souss and Rif. The first destination was Western Africa that has rapidly been replaced by Algeria and Tunisia as destinations but also as stopover to Europe. From First World War to the beginning of the 1970s, Moroccan migration matched the classical pattern of “repulsion/attraction” between two places. Mobilization to take part to the 2 World Wars and requisitioning of colonial workers to sustain the French economy increased the migratory movements38. Then, the first Moroccan migratory flows toward France were mostly imposed. The situation is quite different now. More, until 1973, in most of European countries and both from host countries and migrants’ points of view, migration was considered as provisional.

Since 1986 Moroccan migration undergoes a slowdown because of European border restrictions. However, it quickly set up appropriate strategies in order to by pass the European regulations. Now migration patterns are quite different. On the one hand, spouses and children join the fathers and students and educated people migrations increased, causing a brain drain (AMERM, 2002). Women and children migrations increased too (Charef M., 2002). On the other hand, voluntary illegal migrations replaced involuntary legal ones toward Europe or elsewhere. Each year, more than 100,000 candidates to migration mix themselves with tourists in Moroccan ports and airports. No other country in the World has even faced such a population drain during so long a period of time (Bertoin, 2005).

Nowadays, Morocco depends as much on this phenomenon that provides the financial resources necessary to its economic stability, as on strategic economic sectors as agriculture, phosphate exploitation and tourism.

9.2.1. A globalized migration

The economic crisis during the 1970s, the first oil crisis, the increase of unemployment and the coming back of xenophobic and demagogic discourses lead numerous States to close their borders and to encourage migrants to go back to their countries of origin. In the same time, the family reunification is set up in order to soften this politic option. This measure leads to the feminisation 38 One should note that the pro-Franco Spain requisite numerous Moroccans during the civil war, but that did not cause any migratory flows.

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and rejuvenation of the migratory flows and reduces the number of men living alone in hotels, boarding house or residential hotels that were the main characteristic of Moroccan migration till 1975.

The closure of European borders leads people who wish to migrate to choose other destinations. That leads to the broadening and therefore the globalisation of the migratory system since the 1970s. Moroccan migrants are still numerous in Europe but some of them choose now to go to North America, to Asia, particularly Japan, and to South America.

Map 41 : Number of Moroccan citizens listed in consular services, by region, in 200439.

39 All the maps of this case study have been produced by the Moroccan partners. The drawing of borders represented on these maps do not necessary reflect the opinion of the other partners of the project nor the opinion of the ESPON monitoring committee.

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Moroccan migrants are attracted by developed countries where their number is still growing. According to the Moroccan Ministry of Cooperation and Foreign Affairs, it grew from 1.03 million in 1995 to 2.2 in 2001 to reach 3.08 millions in 2004. That represents nearly 10% of the Moroccan population and that makes Moroccan migrants more and more visible in the World. The 31st December 2004, 2,616,871 Moroccan resided in Europe, 282,772 in Arab countries, 178,914 in Americas, 5,371 in Africa and 5,167 in Asia and Oceania. The growth of the Moroccan migrants varies according to the regions or the countries considered. Their number is increasing in new destination countries like Spain, Italy, Canada and United States whereas the most important flows were previously oriented to France, Belgium, Netherlands and Germany.

Mp 42 : Variation of the number of Moroccan citizen listed in consular services, by countries, between 2002 and 2004.

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To conclude, the Moroccan migration shifts from traditional destinations where the borders are now closed, to new and more distant horizons as Canada and United States.

9.2.2. A presence still important in Europe

For historical reasons, France was for a long time the main destination of Moroccan migrants. But after the Independence, the labour demand of other Western European countries broke this “tête-à-tête”. The spatial pattern of Moroccan migration in Europe changed with the raise of new destinations like Belgium, Netherlands and Germany. When those countries started to close their borders after the oil crisis and economic depression, migrants chose other (and more discrete till there) destinations such as Spain and Italy. In those countries,

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migrants can not pretend to salaried works like in the industry sector but to marginal works or sub-contracting ones that are in the same time mostly illegal and insecure.

The presence of migrants of Moroccan origin started in the 1930s but it was never important in number. It was only after the pro-Franco period and the economic take off that it really started to increase to reach actual numbers. Spain, which was an emigration country, was first a stopover between 1975 and 1985 before to become a attractive pole and destination country (Colectivo Ioé, 1994) welcoming mostly Moroccan migrants. In 1985, the proportion of Moroccan residents in Spain was 5% compared to those in Belgium or Netherlands. In 2000 this proportion is respectively 180% and 1987%. This increase is very rapid, even if the numbers are still low in the new destination countries, such as in Portugal. In traditional immigration countries, the number are stabilising or even decreasing in African and Arab countries. In France, there were 260,000 Moroccans in 197540, 441,300 in 1982 and 584,708 in 1990. In Netherlands, the increase is also impressive (about 10 in 1960, 21,000 in 1969 and 156,000 in 1990). In Germany, the Moroccan presence is weaker, with 30,000 persons at the beginning of the 1970s and 62,000 twenty years later. That distribution was roughly similar during the 1990s, even if the destinations diversified and even if the sociologic profile of migrants changed.

40 Ces statistiques sont issues de l’article de Mohammed Charef, elles ne comprennent que les individus immatriculés par les services consulaires. Elles permettent pourtant d’avoir un panorama relativement clair.

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Map 43 : Number of Moroccan citizens listed in consular services in 2004.

Those numbers are not really the exact ones because of the development of naturalizations among the Moroccan community residing abroad (Belbah M., Chattou Z., 2002). For example, between 1961 and 2000, more than 183,000 persons of Moroccan origin became French. That phenomenon concerns women and men of all ages and all socio-professional categories. It started slowly before 1973 with less than one thousand naturalizations per year. It increased between 1974 and 1990 with an average of 2,500 per year. After that date, more than 10,000 were naturalized each year.

Today, following the formation of “installed and stabilised ethnic communities”, Moroccan migration became the place of a real migratory circulation (Charef 1999). It is “complex”, despite its apparent simplicity, and changing, despite the multiplication of rules that try to slow down or stop the flows. It is supported by the development of the means of transports and communication. The establishment of nation states, with closed borders and national laws, reduced the space left to migratory flows and forced the migrants to circulate in tightened spaces. Each time a migrant tries to cross a border, he faces many obstacles like material obstacles, social norms or laws and does not have other choice than to

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“burn” them, as Moroccan migrants say. Henceforth, despite the growing closure of borders, the Moroccan migration increase and diffuse all over the World.

Map 44 : variation of the number of Moroccan citizen listed in consular services, by country, between 2002 and 2004

9.2.3. Moroccan students in Europe and in France.

One can observe a decrease of the number of departures. Many factors could explain that phenomenon: to proceed to the inscriptions in universities aboard is more and more difficult; the Moroccan government stopped to deliver fellowship to students abroad; the increased difficulties to find a job, even with a diploma; the raise of a new generation, more arabized that scarcely speaks foreign languages. However the number of departures is still high and it concerns more and more Ph D students. Moroccan students abroad are about 33,340 in 1992, i.e. 13.1 % of the total of Moroccan students. In 1990-91, 25,894 Moroccan students were in France, 4,737 in Belgium, 849 in Spain, 422 in Germany, 53 in United Kingdom. The small numbers of students in those countries can be explained by language problems, but also because the fees for the studies are higher than in France. More historical links and the presence of numerous Moroccans in France explain such a high number. France

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attracts a lot of Moroccan students that are the most important foreign group with more than 15% far before Algerian ones with 8.5%. In France, 40.7% of Moroccan students are women in 2000-01. In 2000-01 they were distributed in the following academic fields:

- 26.3% in science and technique and “Grandes Ecoles” - 23.2% in letter and human science - 20.9% in economic science - 11.5% in medicine - 9.8% in laws in politic science - 7.9% in IUT

Moroccan students represent 33.6% of students from South-Mediterranean countries in European Union. Morocco is the 3rd sender of students in the World, with 3.1% of foreign expatriated students, after China (8%) and Japan (3.4%). Hallary C. (1994) notes that Morocco has the most numerous and diversified student diaspora in European Union. For that reason, he compares Morocco with Asian new industrial countries. Morocco has the same role toward France as South Korea toward the United States.

9.3 Migrants: essential contribution to Moroccan economy and society.

Like Tunisia, Morocco is interested by the earnings of its nationals living abroad, certainly because it does not possess gas and oil resources, contrarily to Algeria. As soon as in 1966, it tried to set up a system to collect the money of migrants and to transfer it to Morocco by the mean of the Banque Populaire and its branch offices in European Union, and by incentive actions like the parity between French Franc and Dirham, or the attribution of constructible lands (Charef, 1999). Some private banks followed this example contributing to set up a network of Moroccan bank offices in the main European cities where Moroccans are concentrated. This policy happens to be a success as the number of financial transfers is still growing. Each time a slowdown occurred, the authorities set up appropriate incentives. 9.3.1. Profitable states efforts Financial transfers from migrants have been multiplied by four between 1966 (158 millions of Dirhams) and 1972 (640 millions). That growth is correlated to the number of Moroccan residents abroad, but also to the increase of salaries in European Union and to the development to seasonal migrations. During the 1980s, the transfers have been multiplied by 3, even if an important fall occurred

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in 1988 (20% compared to 1987). That kind of fall contributes to mobilise the State authorities (Belguendouz, 1992) and policy makers that try to restore the confidence of the banks and of real estate and investment sectors (Errachidi, 1993). The first years of the 1990s have been characterised by an impressive increase of transfers that reach the amount of 16.5 billions of Dirham in 1990. That is due to the devaluation of that money by 10% in 1990. Observing the variations during that decade, one should note that the Gulf War did not really affect the Moroccan transfers. In 2001, the level of 30 billions was reached. That ranks Morocco on the 5th position in the World for the amount of remittances, after large countries like India, Philippines or Mexico.

Figure 46 : monetary transfers from Moroccan abroad (millions of dirhams)

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9.3.2. Geography of fund transfers The numbers of origins of transfers follows the geographical dispersion of Moroccan migrants. In the 1960s and 1970s, France was the main destination of Moroccan migrants and therefore the main origin of transfers: it represented 93% of transfers toward Morocco (Baroudi A. 1978). Since the middle of the 1970s, Belgium, Netherlands and Germany also contribute to these transfers. But what has to be underlined is the increasing share of Spain, Italy and Arab States, even if in the two first ones the illegal migration is numerous, that means that workers are concentrated in low wage sectors and send no money by a legal

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way. The increase of migrations toward North America at the beginning of the 1980s leads to a relative decrease of the share of transfers from Europe which still represented 81% of the total flow in 1985. 9.3.3. Moroccan bank network in Europe In Europe the "Banque populaire du Maroc" is the most present with 36 windows and 197 employees, far before the "Banque commerciale du Maroc" (B.C.M.) and the "Banque Marocaine du Commerce" (BMCE). However, the latter is in the second position as regard to the share of transfers (9%) when the B.C.M.'s share is 7%. Those banks have branches all over Europe, in France, Belgium, Netherlands, Great Britain, Italy and Germany and aim to help the external Moroccan trade and to attract the money of Moroccan residents.

Map 45 : transfer of funds from the Moroccan abroad to Morocco between 1990 and 1994.

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Map 46 : transfer of funds from the Moroccan abroad to Morocco between 1999 and 2003.

Map 47 : Evolution of transfer of funds from the Moroccan residents abroad to

Morocco between 1990 and 2003

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9.3.4. Transfer usage

This financial godsend supports the balance of payments. The remittances are one of the main resources of the country. That is why the authorities pay a lot of attention to it and sets out different policies in favours of transfers. From a social point of view, the migrant's role is more and more important and nearly vital for the development of their home region. They set up projects to improve the standard of living of their families: house building, shop or small enterprise opening, improvement of farming techniques, well digging… But they can also aim to help the village community. So migrants are organised in collective development actions within the framework of associations. Acting as genuine "small firms", those non governmental associations have a dense network of relations and a high level of know-how in various domains. They can contribute to well digging, electrification, repairing of roads and trails, building of schools and medical dispensaries, buying of means of transports for the village… Because of this monetary support, migrants could play a great role in the regional and local development. But this support can have reverse unwanted effects, and eventually no effects at all, if it is not integrated in a broader spatial planning document which aims to reach a homogeneous development at the regional scale. But in addition, migrants are also a kind of mediators between their home country and the rest of the World. Therefore, they play the role of "bridge-men". They contribute to the diffusion of ideas and techniques. Their actions broaden the local horizon in establishing connections between their home place and the rest of the world. This action upgrades the image of voluntary work. The transformation of local and regional society mechanism are on their way, but they have to be supported and even more when one considers that the effects of the intervention of migrants will be less and less perceptible in the future because they more and more belong to an other space, that is the country of residence. That is why it is essential to set up a policy to stimulate investments and to root the migrants in the regional society, economy and culture. The Moroccan government knew, first, how to attract the transfers. But, since then, it did not succeed, or did not want to use it as a lever to develop the country. Nevertheless, some local or regional studies (Charef M., Gonin P.,) show the role of those transfers for the creation of new jobs in construction and agricultural sectors (Berriane M., 1993). Moreover, this money helps maintaining the social stability as it helps large joint families’ everyday life.

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9.3.5. Migration: a bridge between the two shore of the Mediterranean Sea. Mobility is one of the most striking social phenomena at the beginning of the 21st century. The life of migrants is punctuated by returns for the vacations of familial events. Travels between country of residence and Morocco take place all the year long, but especially during the summer vacation. The “season” starts officially on June 15th and stop on September 15th. Rush periods are the following ones: from June 25th to Jully 7th; from July 25th to August 7th; from August 25th to September 5th. In 1994, the number of entries of national in Morocco between June 15th and September 5th were about 820,000 (that is an average of 10,000 entries each day and 3,500 cars). But the variation is very important according to the period with a concentration between the end of July and the beginning of August. Till 2000, the registered travels hardly reach one million. In 2003, more 2.3 millions Moroccans resident abroad came in Morocco, 2.5 in 2004. Tanger is the main point of entry and regularly undergoes dramatic increases of the traffic. 9.3.6. Holiday migrations: an other way to connect Morocco and Europe Until recently, each country crossed by Moroccan migrants for vacation had its own laws. There was no harmonisation and coherence with the neighbour countries’ to this respect. The lack of coordination in the implementation of facilities and rest areas (lay-by) lead to the increase of road accidents, the disorganisation of the dense traffic on roads and the congestion of port cities. That compels Morocco and Spain, which are the most affected countries, to coordinate their action in order to face the migrant flows. A shy and nearly informal coordination started in 1983, initiated by the Spanish “Traffic General Direction”, the Embassy of Morocco in Spain and some NGOs as Spanish Red Cross and Moroccan Red Crescent. It led to the building of six rest areas on the Spanish territory. This operation has slowly been institutionalised and leads to a change in the Moroccan-Spanish relations. This seasonal operation, called “transit operation”, has been improved each year and became in 1991 the “Strait crossing operation” that implied in Spain:

- the General Direction of Traffic - the General Direction of Civil Protection - Malaga, Almeria, Ceuta and Melilla ports

On the Moroccan side, the following actors are involved:

- Moroccan Embassy in Spain - Moroccan Red Crescent

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- Royal Gendarmerie - National Commission for the Prevention of Road Accidents - Under-secretary's Department of Ministry of Foreign Affairs in charge of

the Abroad Moroccan community. - Hassan II Foundation for Moroccan Residents Abroad - Local Authorities

The mixed Moroccan-Spanish commission meets several times a year to organise the seasonal travel of Moroccan migrants. At the national level, the actions have one objective: to make the travel easier. The actors of the Moroccan transportation sector are implied in the operation and they are asked to set up efficient equipments to face the seasonal flows. 9.3.7. The travel back actors In 2004, Royal Air Maroc Company estimated that more than 230,000 Moroccan workers used its aircrafts between Morocco and Europe that means around 20% of the total number of passenger without taking into account the persons of Moroccan origin who travel with a foreign passport. About 67% of the Moroccan air traffic is with Europe. Since then, the share of Moroccan travellers on Royal Air Maroc reached 33%. A new fact is the dispersion of those travels all over the year, because of the retired migrants who are used to travelling 5 or 6 times a year. They represent a precious clientele when the season is over. Each year, under the impulse of authorities and in coordination with other transportation actors, Royal Air Maroc sets up supplementary flights between Morocco and the main migration countries. In 1994 the company added 175,000 seats and 230,000 in 2004 in order to handle the number of returns. The importance of migrants is revealed by the creation of seasonal connections, for example Al Hoceima-Amsterdam or Oujda-Bastia, Oujda-Dusserldorf. The main customers of Oujda airports are migrants because tourism is not well developed in the north-easter part of Morocco. Some other air companies propose flights to Morocco such as Air France, in accordance with bilateral agreements. The two countries companies have to share the traffic in an equitable way: prices are often imposed and charter companies are not allowed to transport Moroccan citizens (even if the double-nationality allows travellers to benefit from the charter prices). But charters are oriented to touristy places which are not the same as migrations regions. With the implementation of the “open sky”, air transport between Morocco and Europe will be more and more affordable. Without too high prices for Moroccan

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residents abroad, the plane would have already attracted more passengers. Even with the 30% reduction off granted by the companies to people that have a work permit, tariff are still too high.

Figure 47 : Monthly travellers between France and Morocco between 1990 and 1995.

EVOLUTION MENSUELLE DES VOYAGEURS ENTRE LA FRANCE ET LE MAROC ENTRE 1990 ET 1995

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The “Compagnie Marocaine de Navigation” and other maritime companies in the Gibraltar strait make more efforts to reduce the waiting time in ports, either by renting additional boats or by increasing the frequency of travels. Migrants are the main customers of those companies. Between June 1st and July 30th 1994, there were 694,523 passengers. Most of them transited by one point of the triangle Algésiras-Tanger-Ceuta (85%). The main reason of the domination of those ports is that the fare to cross the Mediterranean Sea is very high from other ports located out of the Strait (Malaga, Almeria and Melilla). It is so high that even those who living in the north-eastern part of Morocco chose the Strait path. 9.3.8. A perennial link between Europe and Morocco In order to face the growth of exchanges between Europe and Morocco, and to link the two continents, a perennial link through the Gibraltar Strait has been evoked during Fes Meeting in June 1979, by the kings of Morocco and Spain. In

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October 1980, a cooperation agreement was signed in which both countries decided to create a commission aimed at programming and coordinating the preliminary studies and to set up two civil societies in charge of those technical and scientific studies. Two projects are considered as possible, from a technical point of view: a railway tunnel and a highway bridge between Cap Malabata in Morocco to Punta Paloma in Spain.

- The railway tunnel would have between 38 and 53 kilometres lengths. It would be made of two main galleries with a railway in each one, plus a service gallery. Cars would be carried on a rail shuttle between two railway stations. It is roughly the same functioning principle as for Euro-tunnel.

- The highway bridge will be made of a succession of spans of 3,000 to 3,500 metres long, in the part of the Strait where the depth is more than 50 metres. The concrete pillars could reach a depth of 300 metres.

9.4 Laws and migration management in Morocco

The tragic events of the 5 to 6 October night had to happen at Ceuta and Melilla to attract the attention on the migrations realities in Morocco, and in the region, and on the relations of Morocco with its northern and southern neighbours. The global economic situation can turn people from all over the World into potential migrants toward a small number of destinations. The increase of the development level gap between northern rich and southern poor countries reinforces the European attraction.

The continuous migration movements through Morocco results from the addition of numerous factors that hamper the social and economical development of Africa, such as the rapid demographic growth41, the multiplication of armed conflicts, the environmental problems, the more and more difficult socio-economic situation and the lack of democracy and meritocracy. In addition, the possibilities to migrate in wealthier and more stable neighbour African countries, such as Côte-d’Ivoire, are more and more scarce.

The migration pressure its highlighted by dramatic events that are reported nearly each day by media which publish the macabre list of the victims that bump into the more and more hermetic border.

41 221 millions people in 1950 ; 800 millions today.

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Because of its geographical situation, Morocco has to face growing flows of illegal transiting migrants. European Union asks it to make more efforts to discourage and stop those flows, trying then to externalise its border management and to make it done by other countries (in Maghreb, in Eastern Europe and in Turkey). Morocco then became the ultimate southern frontier of the Schengen space. But it is very difficult for Morocco to handle alone the migration problem. Legal and illegal migrations became a recurrent social and political issue in the African-Mediterranean relations, as during the Barcelona meeting, but without any concrete effect till now on the departure and transit countries. It seems that European Union, like the United States and Canada, considers casually the dramatic consequence of their migration policies. More, they are interlinked with the contradiction that they argue on the benefit of liberalism but try to limit the migrations of workers. In other words, they encourage the circulation of people that make possible the capital circulation and in the same time they try to stop the migration of people who are the victims of the circulation of capital (relocation, flexibility, unemployment). And in the same time, numerous European economic sectors welcome this illegal and exploitable work force. One example is the employment of seasonal workers for fruits ad vegetable harvesting that rarely follows the employment laws as it is shown by the living and working conditions in some farms in Southern Spain. One can remember too the dramatic events of El Ejido. Other economic sectors do not hesitate to recruit illegal migrants: construction, textile, catering and hotel business.

9.4.1 Morocco between the devil and the deep blue see

Previous migration pattern was characterised by a place of departure and a place of destination, without any twist and turn. Nowadays, migration paths are more and more complex both in time and in space. In this context, Morocco plays an important role as an interface between Africa and Europe in general, and between Iberian Peninsula and Canary Island in particular, because it is placed in a geographical strategic location, so close to the highly coveted European continent.

Candidates to emigration come from numerous countries. They include the illegal national migrants, whose number is slowly decreasing since 2002, due to the security dissuasive measures set up by the Moroccan government and public awareness campaign about the illegal migration dangers. The transit migrations

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have increased since the mid-1980s, and the law-and-order measures to contain illegal migration can not break the dream of a better life.

The desperate rush to force the way to Ceuta and Melillia by night contributed to the production of striking pictures. The video surveillance cameras that punctuate the railings provided quasi-instantaneous pictures of the assault. The worldwide diffusion of these pictures will offend the sensibility of public opinions on the both side of Mediterranean Sea and even further. However, the migrant is far from being a breakage-neck or an adventurer.

9.4.2. Illegal migration, a long uneasy way.

From Agadès, that is the crossroad of the illegal migration, a way leads the migrants to Tamanrasset and from there to Morocco, crossing a large desert and inhospitable space. Migrants are vulnerable to controls (they have to circumvent the check points or to pay the “controllers”), mechanical breakdown, climatic risks like sandstorms, health problems (dehydration, diarrhoea, fever…), robbers, swindler and other people that denounce them, and above all they have to find an opportunity (administrative, human, temporal…) to cross the border. Some of them have left their home and families for years, between 2 to 5 years according to the testimony of Gambian and Congolese migrants. They stay for weeks or months in some regions or cities, trying to take advantage from this forced stop by working to earn something that will allow them to go on. Numerous examples are in Algeria in the construction sector. More, women illegal migrants try to compensate their low income by prostitution.

After many obstacles, the luckiest ones reach Eastern Morocco, near Oujda. Some of them settle in frontier cities like Maghnia, (attracted as they are by the closest locations near the frontier and the view on the Spanish coast from the Moroccan shores), waiting for an opportunity to cross the border, alone or with the help of a runner. They are then stopped very close from Europe. Each new group which arrives increases the number of candidate migrants waiting for departure.

9.4.3. Oujda, a crossroad

The migrants who manage to cross the border near Oujda, generally stay for a while. Probably to have a rest, to get in touch with a frontier runner and to choose the best option for their travel to Europe. Different testimonies underline

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the permanent presence, for years, of illegal sub-Saharan migrants who stay in the mountains, organised in small groups of 6 or 7 persons. During the day, they stay in the universities and in campus, because those spaces are legally preserved from police incursion but also because they receive help from Moroccan and foreign students and teachers.

Some of them choose to carry on travelling. First, they take the public transports by small groups, mixing with the population. But as their number increases, they become more and more visible and the controls are more frequent and severe. They have to take the informal way of transportation whose fare does not stop to increase. The “normal” fare, plus the “risk” supplement puts a serious strain on their migration budget and risks to jeopardize the payment of the travel through the Mediterranean to Europe. The amount paid for the crossing is conditioned by the location of the boarding point, by that of the arrival point in Spain, by the offer, by the season and by the politic context.

9.4.4. the necessity to take short-cuts

When the Algerian-Moroccan border in crossed near Oujda, they are 3 solutions to reach the Mediterranean Sea or Atlantic shores. Sub-Saharan migrants make their choice by taking into account the controls intensity, the contacts at the destination point and the existence of networks.

- The Nador direction leads to a crossing at Melilla or to an attempt to reach the Spanish shore between Malaga and Almeria. The space between Oujda ad Nador is a densely populated agricultural area. That is also a point of departure of international migrants. A significant part of the local population earns its living thanks to the smuggling of illegal migrants between Algeria and Melilla. This way is not often chosen by migrants because of geographical difficulties and because it is far from the Spanish shores. In the “Gourougou” forest, 400 to 1000 policemen set up 113 actions between January and October 2005 and managed to arrest of 6,000 illegal migrants.

- Another option is to cross the Tanger region toward Ceuta or the Andalusia coasts. It is the most utilized path, but also the more controlled one both by Spanish and Moroccan troops. To cross the sea to Spain is very risky, not to say fatal. The crossing is made by fragile fishermen small boats, the so-called "pateras", equipped with a 40 to 60 horsepower engine and overcharged. Sometimes, they carry 90 persons, as it was a case in 2005

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when one of these small boats sank near Tanger. A majority of departures take place all along the Northern Moroccan coast, sometime until Kenitra.

- The third way cross Guercif, Fes, Rabat, Casblanca reaches the Saharan region via Agadir. The aim is to get closer from the Canary Islands. When the migrants, who travel in small groups, reach Rabat or Casablanca, they are handled by a dense quasi-mafia network composed by touts, sometimes compatriots of them who try to make little money and guide them to Agadir. When they have reached Agadir, a new tout drives them by truck or Land Rover toward Tan Tan. Then, they can be hosted in some house or they camp near the city. Frugal meals are sometimes given to them, generally water and bread with canned sardines.

9.4.5. All the Moroccan territories in concerned, but particularly the Eastern part

Observation posts are set up and some 7 000 men are durably mobilised to check the point of passage of illegal migrants, helped by 4 000 men from the Royal Army Forces, Gendarmerie and other helps mobilised after the charges of Sebta and Melilla. That leads to the arrest of some frontier runners and touts and the seizure of the boats.

In the same time European Union puts the pressure on Morocco in order to make it discourage the illegal migration flows. In counterpart, it offers logistic and financial support. During the last meetings of Morocco and European countries, since the end of the 1980, the illegal migration question was most frequently raised. Each time, Moroccan authorities insist to make some European country regularised the Moroccan migrant's situation. But each time European countries seem to be more interested in the identification of presumed Moroccan citizens that have to be expulsed.

One can wonder whether Morocco and other North African countries are able to conceive and to implement a comprehensive migration policy. For the time being, they simply try to cope with the phenomenon because they can not even control the flows of departure from their own countries. Moroccan authorities are aware of the sensible situation of Morocco as a transit area and try to attract the attention of the international public opinion, without any positive effect until now.

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9.4.6. Moroccan migration laws.

Till now, as an emigration country, Morocco did not pay very much attention to immigration phenomenon even if it is one the rare Arab country which has ratified a large number of international texts that protect the migrant workers. However, its old fashioned laws in that field dated from the French protectorate and were no more useful till their abrogation by the 02/03 law. The analysis of the legal framework is useful to observe the management of migration flows by Morocco. This management mostly relies on United Nation principles even if some countries in the region have not ratified them yet.

Table 43 : ratified conventions by Mediterranean countries

Country Convention 1989

WTO

Convention 143

WTO

Convention 1990

United Nation

Algeria 19.10.62

Morocco 21.06.1993

Tunisia

Mauritania

Libya

France 19.03.1953

Italia 22.10.1952 23.06.1981

Spain 21.03.1967

Greece

Portugal 12.12.1978 12.12.1978

Malta

This situation is not specific to the Maghreb. The convention n°97 (1949) has been ratified by only 42 countries and the n°143 by 18 countries only. According to the WTO survey on worker migration, , in 2003, the main reasons invoked are the principles of the equality of consideration between national and migrants, the existence of free public services… Morocco is the only country that ratified the United Nations convention (1990) on that aim to protect migrant workers and their family members.

Morocco has voted laws that try to organise the migration and to protect the migrants: the n°02-03 law (11 November 2003) that unified and harmonised the previous laws and penal code, rationalised the rules of the strangers’ stays and codified the infractions linked to illegal migration. The "stranger" is defined as someone who does not have the Moroccan nationality or none nationality. Generally Moroccan laws connected to the migration issue are harmonised with

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international norms. More, Morocco is now part of international organisations that aim to protect the rights of migrant workers.

In the same time, a "Direction de la Migration et de la Surveillance des Frontières" has been created in order to set out a national strategy to fight against the smuggling of human beings and to monitor the borders. It has to fight against the illegal migration.

9.5 Conclusion

The assault to barbed wire walls of Ceuta and Melilla are not only security questions. Those walls are the symbol of the developing disparities between two spaces and draw one of the most economic unequal borders of European Union. Those assaults and migration flows are neither the responsibility of the sole Morocco nor that of Spain. They set up the term of the relations between rich and poor, North and South, European and African spaces. They have to question us about the amount of sadness they are made of: poverty, starvation, armed conflicts and lack of future prospect in most of African countries. Those events were not only dramatic for the sole European and International consciences. They also strike the Moroccan public opinion on a question they were hardly aware of.

Nowadays, to think about the Mediterranean Sea Region, one have to think globally, to think about complementarities, to find the way to mutual confidence and to underline the convergences. It is necessary to understand the mobility by underlying what phenomena are interlinking people and spaces instead of focus on law-and-order policies.

There is an emergency for Europe to set up a global strategy on the migrations, where Morocco should have a real place and not only the role of a watchman or guard. Europe and particularly countries of the southern bank of the Mediterranean must help Morocco and North-African countries in general to become regional powers, for the interest of both spaces. In this perspective, migrations should not be seen as a problem but as a bridge between shores, as a window on the World for Africa and the living expression of our interdependency.

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