the FoR a place Based approach in development he caSe oF R · the need FoR a place-Based approach...

Liga BaltinaUniversityofLatvia,CentreforEuropeanandTransitionStudies,Rainabulv.19,Riga,LV-1586;[email protected]

the need FoR a place-Based approach in BooSting development…. the caSe oF Riga

Abstract:TheglobaleconomiccrisisthathitallthenationaleconomiesintheEUareastimulatedtheneedfornewapproachesintheplanningandimplementationofregionaldevelopmentpolicy.ThispaperinvestigatesthedebatesabouttheroleofthecityofRigaanditsdevelopmentpotentialas thebiggest city inLatvia,whilst also lookingat thechallengesandopportunities createdbytheneedtorespondtoglobalchanges.ThearticlediscussestherelevanceofcertainfactorsanddemonstratestheactionstakenbynationalauthoritiestopromotethemorebalanceddevelopmentofLatvia,aswellastheopportunitiestoapplyaplace-basedapproachinpromotingthedevelopmentofRigaasthecapitalcityofLatvia.

Keywords:place-basedapproach,capitalcities.

wykoRzyStanie koncepcji polityki ukieRunkowanej teRytoRialnie w celu poBudzenia Rozwoju.

przykład rygi

Streszczenie.Globalnykryzysgospodarczy,którydosięgnąłgospodarekkrajówUniiEuropejskiej,unaoczniłpotrzebęnowegopodejściadoplanowania i realizacjipolityki rozwoju regionalnego.ArtykułanalizujedyskusjędotyczącąznaczeniaRygi–jakonajwiększegołotewskiegomiasta–i jej potencjału rozwojowegow kontekściewyzwań imożliwości związanych z koniecznościąreagowanianaglobalnezmiany.Wartykuleomówionoznaczenieniektórychczynnikówmającychwpływ na obecną sytuację, a także przedstawiono działania podjęte przez władze krajowewcelu równoważenia rozwojunaŁotwie.PonadtoukazanomożliwościzastosowaniapodejściaukierunkowanegoterytorialniewpromowaniurozwojuRygijakostolicyŁotwy.

Słowa kluczowe:podejścieukierunkowaneterytorialnie,miastastołeczne

Introduction

Thediscussionsabout theneed toapplyaplace-basedapproach inregionaldevelopment policy planning and implementationwere raised due to changesintheEuropeaneconomythatoccurredasaresultoftheglobaleconomicandfinancialcrisisin2008.Thesechangesincreasedthedebateabouttheefficiencyof urban policies and how prepared cities were to respond to future socio-economicthreats,andwerecloselylinkedtotheneedtoensurethemoreefficientuseofavailable territorialandfinancialresources, includingthemoreefficient

Studia Regionalne i LokalneNr 2(60)/2015

ISSN 1509–4995DOI: 10.7366/1509499526006

THENEEDFORAPLACE-BASEDAPPROACHINBOOSTINGDEVELOPMENT… 115

useofEUfunds.Inparticular,thediscussionofwhetherthereisaneedformoreinvestments to boost thedevelopment of the capital city, or if there is a needforcontinuouseffortstopromotethedevelopmentofterritoriesthatarelaggingbehindhasbeenadded to theagendaof regionaldevelopmentpolicy.What isthe contribution of a capital city andother cities to national competitiveness?The existing regional disparities amongEU regions serve as evidence for thenecessity to increase the efficiency of regional development policy measuresin meeting territorial challenges (EC, 2014). The need for changes in theapproachesofregionaldevelopmenthassurfacedduetosuchfactorsaschangesinexternalenvironment(e.g.globaleconomicandfinancialcrisis,technologicaldevelopment),developmentofnewpolicyinitiativesattheEuropeanlevel(e.g.newfinancialframework,integratedterritorialinvestments,smartspecialisationstrategies),andchangesinnationallegislativeframeworks.The place-based approach was put forward to highlight the importance of

territorialresourcesandaneedtoincreasinglyfocusonefficiencyandconsiderexistingdifferencesamongeconomic,social,andinstitutionalsettingsinorderto increase development potential. The focus on territorial assets and theirdevelopmentpotentialisnotanewconcept.Initiallytheplace-basedapproachwas applied in the education sector (Gruenewald, 2005). Gradually, a place-basedapproachwasappliedinsolvingsustainableenvironmentissues(Mason,2008),andlateritwasoneofthecentralelementsinthedevelopmentoflocalcommunities(Brennanetal.,2013).Since2009,withseveralreportsproducedbytheEC(knownasBarcareport;Barca,2009)andinternationalorganisations(Crosta,2006;WorldBank,2008),theplace-basedapproachhasbeenplacedontheagendaofEUinstitutionsanditsmemberstates,andisseenasacomprehensive,inclusive,andintegratedapproachtoregionaldevelopment.Themainelementofaplace-basedapproachisafocusonrespectingterritorialneedsthatincludescoherence among development objectives and territorial specificities. It alsoappliestothecontextofurbandevelopmentandrequirescitiestoplayamoreactiveroleinhelpingtoboosteconomicdevelopmentatnational,regional,andlocallevels.Thus,theplace-basedapproachhasbecomeanimportantelementinnational,regional,andlocaldevelopmentstrategies.Theplace-basedapproach isconsidered tobeoneof thepotentialsolutions

to thedevelopmentproblems facedbycities, enabling them to respond to theeconomiccrisis.Itisbasedontheclearacknowledgementofterritorialresources,suchassocialandhumancapital,knowledgeandinnovation,financialcapital,andphysicalresources.Inpractice,theuseofaplace-basedapproachishighlydependent on institutional capacity and cooperation practices. Lately, severalauthors have questioned the importance of the relationship between territory,economy,andgovernance(Capelloetal.,2012),aswellasnewapproachesandtoolsforshapingtheregionalandurbanpolicies.The authordiscerns the followingmain steps in the applicationof a place-

basedapproachinregionaldevelopment:1) Evaluationofterritorialresourcesandtheirdevelopmentpotential;

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2) Determinationofregionaldevelopmentgoalsandtheirmutualcoordinationfortheutilizationofterritorialdevelopmentpotential;

3) Selectionanddevelopmentofsuitableregionaldevelopmenttools;4) Creationofasuitableandflexibleinstitutionalstructure;5) Assessmentofchangesinresourcesandtheirdevelopmentpotential,aswell

astheoutputofinvestmentsinterritorialdevelopment(Baltina,2011).The persistent regional disparities inEurope and the increasing importance

ofexternal factorshavestressed thesignificanceofplaceandaneed toapplya place-based approach to regional development. The growing importance ofendogenous resources, such as human capital, innovation, and accessibilityhighlightedbyNewEconomicGeographytheoryhasbeencomplementedbythegrowingimportanceofinstitutionsasakeyfactorinachievingbalancedregionaldevelopment(Stimsonetal.,2011).TerritorialimpactofglobalisationforregionsvariesacrossEurope.Ithasmadecitiesandtheirinteractionwithotherterritoriesmoreimportantintermsofeconomicgrowth.The place-based approach strengthens the importance of each city in

developingcomparativeadvantagesandthuscontributingtothedevelopmentofthenationaleconomy.Byassumingthateachgeographicalcontextreallymatters,theplace-basedapproachfocusesonsocial,economic,cultural,andinstitutionalcharacteristics, and emphasises the importance of knowledge in developingplace-basedpolicies.AccordingtotheOECD,publicpoliciesaimedatpromotingterritorialdevelopmentandlimitingterritorialdisparitiesshouldfirstandforemosthelpareasdeveloptheirterritorialcapital(OECD,2009).The main focus of this article is a discussion of existing practices, key

challenges,andopportunitiesforapplyingtheplace-basedapproachtoregionaldevelopmentpolicyameliorationandboostingdevelopmentinLatvia.ThecityofRigaservesasacasetodiscusshowaplace-basedapproachisintegratedintoregionaldevelopmentpolicy. Inpromotingpolycentricandbalanced territorialdevelopment, aswell as ensuring global competitiveness of regions based onstronglocaleconomies,aplace-basedapproachinregionalpolicyimplementationisofgreat interest inLatvia.Thustheinteractionbetweengeographiccontext,tailored policies, and institutional capacity is important in achieving regionalpolicygoals.

ThesocioeconomicdevelopmentofRigacityattheregionalandnationallevel

When discussing the geographic context of Latvia it is important toacknowledgethatLatviahasamonocentricdevelopmentstructure,andthatmostofthecitiesinLatviaaresmall–notevenmedium-sizedcitieswhencomparedtoothercitiesinEurope.RigaisthebiggestcityinLatviaintermsofboththenumber of inhabitants and the volume of economic activities. It is one of 30municipalitiesformingtheRigaplanningregion(seeFigure1).However, Riga city faces its own challenges. Even thoughRiga has 643.6

thousandinhabitants(CentralStatisticalBureau,2013),whichis1/3ofthetotalpopulationofLatvia,since2007thetotalnumberofinhabitantsinRigacityhas


beenconstantlydecreasing.Thisdecrease(seeFigure2)meansthatinsixyearsRigahaslost9%ofitsinhabitants.Ifthisnegativetendencycontinues,thereisahighriskthatRigamightalsoloseitsimportantpositioninNorthernEurope,assomeotherNordiccities,suchasOsloorHelsinki,areexperiencingacontinuousincreasein thenumberof inhabitants.Forexample, inHelsinki thenumberofinhabitantshasincreasedfrom564.5thousandin2007to623.1thousandin2013(StatisticsFinland,2013).

710700690680670660650640630620610

2011 2012 20132007 2008 2009 2010

702.6 697.3687.4

673.4

659.4649.8

643.6

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Figure 2. Number of inhabitants in Riga 2007–2013 (in thousands)

Source: Central Statistical Bureau, 2013.

Figure 1. Five planning regions of Latvia

Source: Development of Regions 2011. State Regional Development Agency, Rīga, 2012.

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AccordingtotheSustainableDevelopmentStrategyofLatviauntil2030,Rigaand the eight other biggest cities of Latvia are considered to be developmentcentresofnationalimportance.However,theothereightcitiesaresignificantlysmaller thanRiga in terms of both the number of inhabitants and the size ofeconomy(seeTable1).ThetotalnumberofinhabitantsintheninelargestLatviancitiesis1.14million(OfficeofCitizenshipandMigrationAffairs,2011).AttheEuropean level, onlyRiga is ranked among the 500 largest cities in terms ofpopulation(rankedat47thplace).

Table 1. Number of inhabitants and number of economically active enterprises in the nine biggest cities of Latvia

City Number of inhabitants in 2014

Number of economically active enterprises in 2012

Rīga 643,368 60,601

Daugavpils 87,403 4,427

Jelgava 57,332 3,203

Jēkabpils 23,269 1,275

Jūrmala 49,750 3,064

Liepāja 71,926 4,143

Rēzekne 29,948 1,843

Valmiera 23,657 1,874

Ventspils 36,677 1,996

Total 1,023,330 82,426

Source: Central Statistical Bureau, 2014.

ItisevidentthatRigamakesasignificantcontributiontothenationaleconomyofLatvia. Inaddition,among thebiggestcities inLatviaRiga is theonlyonethathasapositiveterritorialdevelopmentindex.1Bothoftheabove-mentionedindicatorsmeanthatRigaproducesmorethan50%ofthetotalGDPinLatvia.However,itmustbenotedthatduringtheeconomicrecessiontheshareofRiga’sGDPdroppedfrom57%to53%oftotalGDPinLatvia(SeeFigure3).

1 Territory development index is a synthetic indicator that provides an opportunity tocharacteriseandcompareterritorydevelopmentaccordingtoseveraldemographic,socioeconomicindicatorssimultaneously.AterritorydevelopmentlevelindexiscalculatedinLatviaformorethantenyearsbytheStateRegionalDevelopmentAgencyinordertoassessthedevelopmentofvariousterritorialunits,anditreflectstherelativedevelopmentleveloftheterritoryduringthereported year.


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51.0

50.0

2006 2007 2008 2009 2010

57.4

55.0 55.0

53.0 53.2

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Figure 3. Changes in Riga’s contribution to the national GDP in 2006–2010 (%)

Source: Riga City Council, 2014a.

Even though Riga’s contribution to national GDP decreased during theeconomicandfinancialcrises,ithasattractedmorebusinesses,andthenumberofbusinessesregisteredinRigahascontinuedtorise(seeFigure4).Also,mostofthebiggestenterprisesregisteredinLatviaarelocatedinRiga.Thisshowsthatmostof thebusinesseshavefavouredRigaasanarea thatcontributesmost togeneratingincomeifcomparedtootherlocations.AsimilarreasonisbehindchoosingRigaasalivingplace:peoplepreferto

liveinaplacethatprovidesgreaterlong-termbenefits(services,labourmarketopportunities,etc.).Thisshowsthatgeographicallocationdoesmatter.ThisisinlinewithLocationTheory,whichstressesthattheterritoriallocationofbusinessactivities is influencedbytheavailabilityofrawmaterials, intermediategoodsand services, and access tomarkets (Rose et al., 2012).This theory has beendeveloped further and shows that accessibility is still one of themain factorsaffectingregionaldevelopment(Rodrigue,2013).Thus,thankstothebeneficialgeographiclocationofRigacityanditsaccessibilityatanationalandinternationallevel, it has attracted an educated workforce and has developed an attractivebusiness environment.The shareofGDP, thenumberofbusiness entities, theamount of investments, and other indicators determine that Riga’s economicdevelopmenthasaclearimpactonthedevelopmentoftherestofLatvia.Throughitshighconcentrationofmostoftheavailablebusinessopportunitiesandjobs,Rigacityensuresgoodaccesstovariousservices,suchashealthcare,education,infrastructure,andothers.Also,theconcentrationofmostscientificinstitutionsandhigh-techcompaniesinRigaresultsinahigherinnovationcapacity.

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10,000

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2006 2007 2008 2009 2010 2011

44,44548,569 49,724 50,700 52,412

55,314

Figure 4. Economically active enterprises in Riga, 2006–2011

Source: Riga City Council, 2014a.

It is evident that other cities in Latvia are highly dependent on Riga’sdevelopment.TheconcentrationofeconomicactivitiesinRigaandsurroundingareas,togetherwithundevelopedroadandrailwayinfrastructure,resultsinthelower competitiveness of other areas in Latvia. It has been concluded in thestudy analysing socioeconomic developments of the cities in Latvia that thegreaterthedistancefromRiga,thesmallerthemarketpotential(StateRegionalDevelopmentAgency,2008).However,eventhehighcontributionofRigatothetotalGDPinLatviadoesnotresult intheexpansionoftheurbanareaofRigacity,andthuspreventsitfrombeingamajorfeatureofeconomicgrowth.Also,the monocentric structure of Latvia contributes to labour mobility and urbanmigrationprocesses fromother territories intoRiga, rather than the economicgrowthofthoseterritories.ThereisasignificantgapbetweenRigaanditsagglomerationasacentralpart

ofthecountryandtherestoftheLatvianterritory(StateRegionalDevelopmentAgency,2012).The regionaldisparitiesbetweenRigaandother territoriesaregrowing,whichshowsthattheregionaldevelopmentpolicymeasuresthathavebeen implemented in Latvia so far have not contributed to the reduction ofregionaldisparitiesinLatvia.


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Riga

Riga region, exceptRiga

Vidzeme planningregion

Kurzeme planningregion

Zemgale planningregion

Latgale planningregion

Figure 5. Regional GDP per capita to national average level

Source: Author’s calculations based on data from the National Statistical Bureau.

GDPpercapitacalculationsdemonstrateregionaldisparitiesandshowthatinRigaGDPpercapitaisabove150%ofthenationalaverage,whileinotherregionsitrangesbetween50%intheLatgaleplanningregionand89%intheKurzemeplanningregion(seeFigure5).However,thegraphshowsthatsince2009thesedisparitiesbetweenRigaandotherterritorieshaveonlyslightlydecreased.WhencomparedtotheaveragelevelfortheEU,Rigamanagedtoreachonly63%oftheEU’saverageGDPpercapita.Also,attheEUlevelLatviaisthecountrywiththelargestregionaldisparitiesandisoneofthemostunevenlydevelopedcountriesinEurope(Baltina,2011).ThesurveyofthedevelopmentcentresinLatviaandtheirareasofinfluencedemonstratedsimilarconclusionsregardingtheimportanceofRigacityatthenationallevel(StateRegionalDevelopmentAgency,2013).Rigaasacapitalcityhoststhemainpublicadministrationinstitutions,alongwiththebiggestshareofhighereducationandculturalinstitutionsandorganisations.Rigaisalsothecountry’smaintransportandinfrastructurehub.ThesurveyreaffirmedthatRigaisthemostimportantemploymentandservicedeliverycentreinLatviaandhas thegreatest impacton territorialdevelopment throughout thecountry.However,thisstudylackedacomparativeanalysisofRigacityandothercapitalsandthebiggestcitiesintheBalticregionandtheEU,onlydiscussingtheroleandcompetitivenessofRigaatamacroregionallevel.Thestudyanalysingthesocio-economicdevelopmentofthecitiesinLatvia

mentions several other cities of Latvia as potential development centres thatcouldserveasalternativestoRiga(StateRegionalDevelopmentAgency,2008).Theauthorbelieves thatnoneof theothercitiesofLatviashouldbecalledanalternative development centre, because they would not be able to serve as

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asubstituteforRiga.However,thisconclusionpointstotheneedforfunctionalcomplementarityamongcitiesofLatviainordertopromoteoverallgrowthanddevelopment.Inregardstothisconclusion,itmustberememberedthatthereisaweaktrackrecordofcooperationamongthelocalauthoritiesofLatvia(Bite,2012),andtheroleofplanningregionsinLatviaisnotwelldefinedinregionaldevelopmentpolicy.Taking into account the high concentration of economic activities in Riga

cityandthesurroundingarea,oneoftheissuesatstakeishowthedevelopmentpotentialofRigacitycanbeusedforboostingthedevelopmentofotherterritoriesinLatvia.ThisincludesvariouscollaborationoptionsaswellasthetransferofexistingterritorialdevelopmentknowledgeandcompetenciesfromRigatootherterritoriesinLatvia.Thisisalsoemphasizedbytheplace-basedapproach,asitfocusesonachievingresultsdirectedatthedevelopmentofneighbouringareas.Forexample,improvingthelivingenvironmentinadisadvantagedareawouldalsobringimprovementtothepeoplelivingnearby(FritschandNoseleit,2013).Variousacademicshavediscussedthefactthatregionaldevelopmentisadynamicprocessandthegrowthoftheneighbouringregionsandtheeconomicbenefitssuchgrowthbringsmayplayanimportantroleinthedevelopmentofaterritory(Capelloetal.,2008).Thisexposesthecontradictionwithinexistingefforts tolimitthedevelopmentofRigacityby,forexample,exemptingRigacityfromthelistofbeneficiariesofsomeEU-fundedactivitiesandconcentratingsupportonlessdevelopedterritoriesinLatvia.Consequently,wecanconcludethatgiventhecurrentsocio-economicindicatorsandtheweaknessesofregionaldevelopmentin Latvia, there is an urgent need to clearly define development priorities atnational,regional,andlocallevels,aimedatincreasingcooperationamonglocalandregionalauthoritiesandthebetteruseanddevelopmentofterritorialassets.

ThedevelopmentpotentialofRigacityinaninternationalcontext

In order to understand the likely impact of regional development policyimplementedinLatvia,thespecificsofawiderinternationalcontextshouldbeconsidered.The sustainabledevelopmentplanofRigacity stresses that at theinternationallevel,RigafindsitselfatacrossroadsofWest-EastandNorth-Southtransportcorridors,andislocatedattheBalticSea.ThisallowsRigatoservemainexportindustriesandtobeanimportanttourismdestination.ItisevidentthatRigahas the potential tomake substantial contributions to economic growth at thenationalandmacroregionallevel.Also,accordingtotheNationalDevelopmentplanfor2014–2020,RigaistheonlycityofinternationalimportanceinLatvia.However,Riga’spositionintheBalticSeaareaincomparisontootherEUmemberstatesshowsanotherdimension.AttheEuropeanlevel,amongthecitiesofLatviaonlyRigaisconsideredtobeabigcity.Thus,amongtheobjectivesofsustainabledevelopment of Latvia leading up to 2030 is the following: to strengthen theinternationalcompetitivenessofLatviaanditsregionsbyincreasingRiga’sroleasametropolisofNorthernEurope,andtheinternationalroleoftheotherlargestcitiesof thestate. Inaddition, thedegreeofconnectivityofcities inLatvia is


low,while tomanysmallandmediumsizedcities inEuropeahighdegreeofconnectivityisadominantcompetitiveadvantage(McCann,2013).SomeotherstudiesthatincludethecomparisonofkeyindicatorsofEuropean

citiesandregionsoftenarguethatonlyregionswithapopulationofonemillioninhabitants ormore can be considered important players in regional policies.Forexample,thesurveycarriedoutbytheRegionalStudiesCentreinHungarystates thata regionof1–2millionpeople isconsidered tobe theoptimal sizefor an elected regional government in order to be able to implement regionaldevelopment policy aimed at achieving clear economic goals, developingmoderninfrastructure,andensuringproperregionaldevelopmentplanningandimplementationstructure(Horvath,2011).Itisalsoagoodsizeforaregiontobecomeastrongplayerindecision-makingprocessattheEU-level.AttheEUlevel,RigaandothercitiesofLatviaarelaggingbehindconsiderablyandthereisastrongneedtoraisetheinternationalcompetitivenessofLatvia,itsregions,andcitiesbypromotingtheintegrationofLatviancitiesintoeconomicstructuresandnetworksatthelevelofBalticSearegionsandtheEU.With regard to international co-operation, it is important to mention that

only Riga ensures proper territorial accessibility in terms of the availabletransportinfrastructurethatisneededtoattract,amongothers,foreignbusinesspartners.Also, in theESPON study on functional territories,which described1595 functional areas with more than 50 000 inhabitants, of which 64 areasaremetropolitanareasandonly40–60areseenasessentialcontributorstotheEuropeaneconomy,RigawasseenasthebiggestfunctionalterritoryinLatvia(ESPON,2007).TheESPONstudyanalysedthefollowingfivefunctions:

• The administrative functions (e.g. capital city, chief towns, cities hostingheadquartersofimportantEuropeanandinternationalinstitutions);

• Thedecisionfunctions(e.g.localisationoftheheadquartersandsubsidiariesofthebiggestnationalandinternationalcompanies);

• Thetransportfunctions(e.g.theconnectivityofacitywithothercities;roadandrailconnectivity,airtrafficandseatransport);

• Theknowledgefunctions(e.g.localisationofthemostimportantuniversities,researchcentres,andhigh-technologyproduction);

• Thetourismfunctions(e.g.scaleoftouristicactivities).According to the above-mentioned functions, six potential functional areas

were identified inLatvia:onemetropolitanarea, twomedium-sizedcities andthreesmallcityareas.ThestudyshowedthatattheEU-level,mostLatviantownsare considered small and are not classified as potential growth poles aroundwhichpotential functionalareascouldbedeveloped.At theEUlevel theonlycompetitive functional region isRigametropolis;however, there isaneed forfurthermeasurestosupportitsinternationalcompetitiveness.

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Use of EU funds for implementing the place-based approach

Key statements of regional development in policy documents have notsignificantly changed since 1996, when the first regional development policyconcept was approved (Cabinet of Ministers, 1996). The main regionaldevelopment goal remains that of reducing negative territorial and socialinequalities, mainly between Riga and surrounding areas, and the rest of theterritoryofLatvia.Since2004whenLatviajoinedtheEU,theEUfundsarethemainsourceoffundingforthepromotionofregionaldevelopment,andtoreduceregional disparities in Latvia. However, studies on the impact of EU fundedprojects on territorial development in Latvia have concluded that the socio-economicdisparitiesbetweendifferentareasofthecountryhavenotbeenreduced(StateRegionalDevelopmentAgency,2008;MinistryofFinance,2014).ThisconclusioncontributestothedebateontheefficiencyofEUfundsandaplace-basedapproachasatooltoachievemorebalancedterritorialdevelopment.The place-based approach was not explicitly mentioned in the planning

documentsof2007–2013.Somedistantreferencestotheplace-basedapproacharefoundintheguidelinesontheEUSFhorizontalpriority‘BalancedTerritorialDevelopment and the International Competitiveness of Riga’. However, theemphasis thatwasput on this horizontal priority indicated an increased focuson urban development.The guidelines stated that in order to ensure balancedterritorialdevelopment,itisnecessarytopromotepolycentricdevelopmentandthe implementation of spatially differentiated support tools responding to thegrowthpotentialandneedsofterritories.The report on the implementation of EU SF horizontal priority ‘Balanced

Territorial Development and the International Competitiveness of Riga’ in2007–2013(MinistryofFinance,2014)concludes that therearenosignificantchanges in reaching balanced territorial development in Latvia and only theRigaPlanningRegionisabovetheaveragenationalsocioeconomicindicators.However,itstatesthatthereductioninthevalueoftheterritorialdevelopmentindexintheRigaregionindicatesthedecliningdominanceofRigaregion,andconsiders that reduced dominance ofRiga is a precondition towards reachingbalancedterritorialdevelopment.ThereisacleartensioninpolicydocumentsanddiscussionsinLatvia,betweenthesimultaneousneedtopromotemorebalancedpatternsofdevelopmentwhilstatthesametimestrengtheningtheinternationalcompetitivenessofRiga.In2007–2013,theRigaPlanningRegionreceivedthelargestamountofEU

funding(31.7%or703.9millionEuros fromtotalallocatedfundingof2217.6millionEuros)outofallregionsinLatviaforactivitieswithregionalandlocalimpact.Rigacityhadattracted50.6%ofalltheEUfundsreceivedbytheRigaPlanningRegion.However, in termsof allocationof fundsper inhabitant, theRigaPlanningregionshowsthelowestvalueof644.4Eurosperinhabitantamongall regions,whereas theKurzemeregion reached1665.7Eurosper inhabitant.ThisismainlybecauseofahighnumberofinhabitantsinRigacity.Thebiggest


share of funds in Riga city was targeted at improving infrastructure; mainlytransportation,watermanagement,ICT,andsocialandtourisminfrastructure.In2007–2013,thelargestamountoffunding,andthemainactivitycontributing

totheapplicationofaplace-basedapproachinregionaldevelopmentinLatvia,was implemented under the ERDF priority ‘Polycentric development’. Themainobjectiveof theprioritywas to fosterpolycentricdevelopment inLatviabyprovidingsupportaimedatstrengtheningcompetitiveness,accessibility,andattractivenessfactorsforthedevelopmentoftheurbanenvironmentaccordingtointegrateddevelopmentprogrammesoflocalgovernments.Thetotalfundingof323millionEuroswasallocatedtothefollowingthreeERDFactivities:growthofnationalandregionaldevelopmentcentres;sustainabledevelopmentofRiga;growthofamalgamatedmunicipalities.RigacitywasaneligiblebeneficiaryonlywithintheactivityonsustainabledevelopmentofthecityofRiga,aimedatraisingitscompetitivenessbydevelopingdeprivedneighbourhoods.Approximately11.7millioneuroswithin thepriorityofpolycentricdevelopmentwereallocated toRigacity.Underthisactivity,RigacouldproposeprojectsconsideredessentialinthedevelopmentofRigacityandforeseeninthedevelopmentstrategyofRigacity.Within this activity Riga city proposed two projects for revitalising twodeprivedneighbourhoods, bothofwhichmainly included the improvementofroadinfrastructureandpublicspaces.The priority ‘Polycentric development’ is presented by the Ministry for

Environmental Protection and Regional development as themain example ofapplying the place-based approach inLatvia.However, in practice the above-mentionedthreeactivitiesfundedunderthepriorityofpolycentricdevelopmentservedmainly for thepurposeofallocating theEUfunds to17selectedcitiesin Latvia, as no in-depth analysis of the territorial development resourcesand development potential was carried out prior to the decision of EU fundsallocation.TheideabehindthisapproachwastheinitiativeoftheMinistryforEnvironmental Protection and Regional Development to develop a new localinvestment planning system envisaging support to the following spaces ofnational interesthighlighted in the long-termsustainabledevelopmentstrategyLatvia2030:developmentcentres,ruralareas,Rigametropolitanarea,theBalticSea coast, and the Eastern border. This approach foresees certain investmentprioritiesforeachofthesefocusareasandtheapplicationofthequotaapproachinthedistributionofEUandnationalfunding.Theanalysisoftheprojectsfundedin2007–2013underthepriority‘Polycentric

development’showedthattheprojectsimplementedeitherinRigaorothercitiesweremainlyfocusedonthedevelopmentofroadandsocialinfrastructureratherthanonbusinessinfrastructure(Baltina,2014).Theseprojectswereonlyremotelyrelated to theuseofexisting territorialpotential forpromoting innovationandentrepreneurshipactivities,andthustheefficientuseofEUfundsandconformitywiththeplace-basedapproachwasquestioned.Basedonthepreviousexperienceof 2007–2013, the new partnership agreement for 2014–2020 alsomarks theinefficient use of territorial resources as being among themain challenges toensuringterritorialcohesion.Similarconclusionswerereflectedintheresultsof

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thereportevaluatingadherencewithenvisagedobjectivesandthesustainabilityofprojectsfundedbytheEuropeanAgriculturalFundforRuralDevelopmentandtheERDF(TheStateAuditoffice,2014).ItshowedthatthereisastrongneedtomovefromEUfundsallocationstoEUfunds’investments,therebyensuringa more efficient and sustainable use of EU funds towards reaching cohesionpolicyobjectives.Thespecificfocusofthereportwasonthesupportprovidedtoinnovationandbusinessdevelopmentactivities.Itwasconcludedthatthecurrentimplementationandmonitoring systemofEU funds isnotmotivating theEUfunds’ beneficiaries towards themore sustainable and long-term developmentof their activities, and thus are limiting in terms of making use of territorialopportunities.It is envisaged that in 2014–2020, the priority of polycentric development

will continue to support the nine biggest cities in Latvia. It is planned thatthedevelopmentofotherbiggercitiesofLatviawill reduce theconcentrationof economic activities in Riga. Among other priorities for 2014–2020, thelargest share ofEU funding inRiga city are foreseen for improving transportinfrastructure(e.g.developmentofpublictransportinfrastructure,improvementofmultifunctionalpublicinfrastructure,promotionofsafetyofports).Thefinancialcrisishighlightedaneedtodiscusstherealachievementsmade

byEUfunding inRigaandothercities inLatviaand therealcontributionsofcitiestotheeconomicdevelopmentatthenationallevel.Inthebeginningoftheprevious financial period of 2007–2013, economic growthwas also promotedby high levels of public investments. However, the crisis uncovered the realeconomic and social problems faced by Riga, ones that weremasked by thefinancial growth thanks to the boom of the real estate market and financialservices.Thishighlightedaneedforbettertoolsformonitoringsocioeconomicdevelopment,whichwouldhelp identifymain territorialdevelopmentchangesandwouldensure thehighquality territorial informationforsupportingpolicymaking and implementation, including the planning of territorial investments.Consideringthecontinuouslackofsuchtools,oneofthemainquestionsinthenewfinancialperiodof2014–2020remainsthatofstrategicinvestmentprioritiesandtherealimpactofEUfundsonterritorialdevelopment.While entering into the new financial period 2014–2020, one of the key

questionsisaboutraisingtheefficiencyofpublicandprivatesectorresources,enhancing thegrowthofcities,andreducingeconomicandsocialgapswithinthecountry,namelybetweenthecapitalcityandotherterritories.InLatviatheimplementationofaplace-basedapproachismainlylinkedtotheallocationofEUfunds.However,itisimportanttofocusmoreonanalysingthecontextualandplace-basedinformationinordertoidentifythoseareasinwhichthereisnotonlythehighestneedforEUfundsallocation,butwhichalsoprovideaclearstrategyforenhancingthedevelopmentpotentialofavailableterritorialresources.


Main challenges of the place-based approach

Withregardstotheplace-basedapproach,themainchallengeistofindthebestwaystousetheavailableadvantagesandresourcesforgrowthasefficientlyaspossible.ThechangestothepresentmonocentricsettlementstructureinLatviaareplannedbypromotingthepolycentricsettlementstructure.Itisexpectedthatpolycentric developmentwould help to reduce the regional disparities amongtheregionsandwithinregionsthemselves.Theplace-basedapproachhighlightsaneedtodevelopsuchpolicymeasuresthatwouldencouragetheuseofexistingterritorial advantages and the unique competences of Riga and other cities.Theapplicationofaplace-basedapproach in regionaldevelopmentasdefinedby the authorwouldentail the creationofpolicy instruments and institutionalstructurethatwouldenableaclearcontributiontotheuseanddevelopmentofterritorialpotentialbyincreasingthecapacityofhumanresources,institutions,andinfrastructure.IthasbeenacknowledgedthatthereisalackofcoordinatedplanningofdevelopmentatthenationalandregionallevelinLatvia.Theemphasisontheapplicationofamoreintegratedandplace-basedapproach

might contribute tobetter cooperation amongRiga city and surrounding localgovernmentsandserveasatoolforcoordinatingdifferentinterestsatnational,regional,andlocallevels.However,sincetheeconomicdownturn,RigacityhasputmoreeffortintopromotingitsowninterestsandemphasisingthebenefitsofRigaasa livingarea,andisnotcontributingtomorecooperativemeasures.ItdoesnotseetheimportanceofneighbouringareasinboostingthedevelopmentinRigacity(RigaCityCouncil,2014b).Majorthemesforfurtherdiscussionremaintheuseofaplace-basedapproach

inpromotingterritorialdevelopmentandcombatingtheeffectsoftheeconomiccrises inRiga and other cities inLatvia.The question of how to increase thepositiveeffectsofthedevelopmentofRigacityonthesocioeconomicperformanceofotherregionsinLatviaremainsontheagendaofpolicymakers.Oneoftheinstrumentsistheelaborationofterritorialdevelopmentinitiativesthatcombineinvestments in infrastructure,promotionof economicdevelopment, and socialinclusion.Howeverthisapproachisnotsufficientlydiscussed.

Conclusions

TheRigaregion,amongtheotherplanningregions,thankstothesocioeconomicindicators ofRiga city, stands out appealingly in terms of population and thenumberofeconomicallyactiveenterprises.Theanalysisofliteratureandstatisticscarried out by the author showed that, in linewith the place-based approach,even though most of the economically active enterprises are concentrated inRiga,thedominanceofRigacannotbeassessedasakeydeterminantinregionaldevelopment planning; rather, there is a need to create conditions promotingdevelopmentintherestofthecountry.Thereisastrongneedtocreatenecessaryconditions forpromoting thedevelopmentpotentialand itsmoreeffectiveuseforthefurtherdevelopmentofRigaandotherterritories.Thisisalsoimportant

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intermsofEUfundsplanningandimplementation,asanalysisof theprojectsfundedin2007–2013showedalackofaclearlinktotheuseofexistingterritorialresources and their development potential. In order to build this link, there isaneedforhighqualityinformationatnational,regional,andlocallevels,aswellasforextensiveknowledgeandskillstomanageterritorialinformationinordertosetupaproperinstitutionalframeworkanddevelopplace-basedpolicies.Itisimportanttoensuretheregularre-assessmentoftheterritorialresourcesofRigaandothercitiesandtheirdevelopmentpotential.ThecityofRigacouldincreaseits contribution to the integrated territorial planning at national and regionallevels,whichmayalsoincludeincreasedparticipationinmonitoringterritorialdevelopment.InlinewiththeneedtoincreasetheinternationalcompetitivenessofthecityofRiga,itisessentialtocarryoutcomparativeanalysisoftheLatvianregionsandcitieswithotherEuropeanregionsandcitiesinordertogatherthenecessaryevidenceforassessingthepositionofthecityofRigaattheEuropeanlevel.Thereisalsoacontinuousneedtodevelopmeasurescontributingtoamore

integrated approach in regional development planning; for example, in suchareas as transportation infrastructure, economic cooperation, and other areaswhere cooperation among authorities at a local and regional level is essentialfortheachievementofcohesionpolicygoals.Thus,aneedforothersolutionsinpromotingtheverticalandhorizontalcooperationremains.Thissituationisalsofullyapplicable toRiga,ascooperationwith itsneighbouring territoriesat thefunctionallevelinnotmentionedinanyofitsplanningdevelopmentdocuments.Whendevelopingnewfinancialinstrumentsitisimportanttoemphasisethe

need to create conditions for themoreefficientutilisationof thedevelopmentpotentialof territories, insteadof efforts to reduce theRigadominance factor.It is also important to create a proper institutional and legal framework thatis considered an important variable in, ensuring not only the exploitation ofterritorialresources,butalsointhefurtherexplorationofdevelopmentpotential.

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