Socio-economic
backwardness in the Danish peripheries[1]
is an enduring problem as it is in other OECD countries. We shall
argue that the economic and political conditions to promote regional
growth and job creation in the Danish peripheries have become more
difficult with increasing globalisation and the ongoing turn towards
a knowledge-driven economy. In addition, the situation for the peripheries
has become more uncertain due to the political reactions to globalisation,
for more reasons 1)
a
growing uncertainty of economic growth
policy and job creation at the national as well as at the regional/local
level (Beck 2002: 8); 2)
a
change of industrial policy in favour of knowledge based production
and services which to a great extent requires knowledge developing
institutions and a well skilled population, a lack in the peripheries;
3)
a
new paradigm of regional policy favouring the largest cities and regions
that are already endowed with the requirements necessary to be competitive
in a globalised and knowledge-driven economy. In
the first part of this article, we deal with this changed global and
national context. Subsequently, we draw a generalised picture of the
geographical pattern of “growth and marginalisation” in
Denmark since 1990. This is followed by the story of a peripheral
medium sized city which in the latest years has approached a turning
point in terms of job creation, mainly due to a new endogenous development
strategy and innovative business development activities financed mainly
with local resources. The
globalisation process with its liberalisation of international economic
transactions and its tendency towards homogenisation of national business
environments is seen as a social construction. Globalisation implies
that most national economies have been further integrated into a global
economy leaving the national state with less influence on national
economic growth and employment (Jessop 2002). The successfulness of
growth and employment policy has become more uncertain due to Facing some of the same problems the
nations are at the same time positioned differently in the global
economy due to e.g. differences in openness, structural composition
of industries, importance of transnational firms; due to
different levels of education, innovation and research, and
due to different welfare arrangements. Globalisation in itself is an expression of the neo-liberal
trend that has dominated international economic politics in the last
decades and which also penetrates national policies in the OECD countries,
but to different degrees and in different ways. A recent study of
welfare regimes concludes that the neo-liberal turn has been most
profound in the most liberal countries (Swank 2002; see also Clarke
2004). We would postulate that the same is the case regarding changes
of national labour market systems. The point is that national responses
to the globalisation differ due to economic, institutional and political
differences among the OECD countries. The hegemony of neo-liberalism
differs with the type of society (Jessop 2002). Nevertheless
national politics have been directed much towards what has been called
politics of competitiveness or workfare politics (Andersen et. al.
2003, Clarke 2004, Jessop 2002). Regarding growth and employment policy
two responses to globalisation can be identified. The first one is
a knowledge-based economy route to employment which focuses upon entrepreneurship,
innovation, research and to a certain extent a high skilled labour
force. Denmark has chosen this route which on the one hand has meant
more support to framework conditions for industrial growth, innovation
centres, science parks and on the other hand an active labour market
and social policy with education programs for unemployed people and
people living from social benefits. Due to a relative low unemployment
level Denmark was counted as a success for other countries to follow
(Andersen et. al. 2003). The Danish outline has had some success,
however success has had difficulties in finding its way to the peripheries.
Here, employment and population growth has been minor or negative
and labour market marginalisation is still much above national average.
Subsequently, a relatively high number of recipients of social benefits
can be identified in the peripheries (Fig. 2). In Denmark, like in
most of the richer OECD countries, the new economic conditions as
well as the general direction of economic policies seem to disfavour
the peripheries because they do not possess either the “infrastructures”
or the human resources needed to support a knowledge driven economic
development. The
second route to employment that can be identified in the richer and
most liberal OECD countries, e.g. in the UK and in the US, is based
upon securing that salaries for unskilled labour are kept low. This
“low route” is needed in order to bring down the non-employed
part of the active population. The low salary level is secured by
setting a very low minimum salary, by deregulating the labour market
and by tolerating an illegal labour market (Andersen et. al 2003:
42-44, Giddens 2002: 9, 17). The policy is legitimised by accepting
meritocracy and a higher level of social polarisation (Giddens 2002:
38-39). The poverty that it entails should be reduced by social policy.
The problem in the globalised economy is that non of the routes or
a combination of them are any guarantee of sufficient employment to
keep non-employment low and in the long run to secure the welfare
society (Bauman 2002: 79-85; Beck, 2001: 8-9, 34-36). Although we
refrain from being as pessimistic as Bauman and Beck, we see the new
workfare politics as a work of Sisyphus to keep the level of employment
and incomes sufficient high to sustain the welfare societies. And
this work is even harder in national peripheries.
A
new paradigm of regional politics has been part of the change towards
workfare politics, at least in Denmark. The traditional national policy
to help the peripheries to create new jobs and to promote a more equal
balance of employment among the regions was dismantled during the
1980s, leaving this type of regional policy to the EU. Instead, the
new policy of “great city competition” which supported the
greatest cities and especially Copenhagen saw the day around 1990
(Desfor & Jørgensen 2004). It was supplemented by a regional industrial
promotion policy where all types of regions could receive support
for building up institutional capacities to set up programs in order
to assist entrepreneurs, promote new technologies and innovations
and to built industrial networks and clusters (Ministry of Industry
1995, 2001 a and b). At the same time local authorities were allowed
to be more active players and to form partnerships with private enterprises,
but they also had to take a bigger share of the economic burden of
new growth initiatives. This was also the case with the national co-finance
of the EU programs (Hansen & Abbas 2003). Thus, economic growth
and the employment creation were seen mainly as a problem of the regions
and local areas themselves to address. In
this period, Danish peripheries were generally not treated as special
or privileged areas. In contrast, the support seemed more and more
to be favourable to those regions where it was easiest to create growth
and jobs. Recently, the government has given the traditional privileged
periphery policy a comeback as a “new” part of its regional
policy (Ministry of Industry, 2003). The fund for rural districts
has been supplemented by a policy to help the new-delimited peripheries
(almost what we call “marginalised Denmark”) together with
a number of declining fishery towns. For each of these regions a growth
strategy has to be formulated by a private-public partnership assisted
with a policy which ameliorates their potential as residential areas
for commuters. However, funding for these initiatives are minor and
the outcome can be that most of these regions will become residential
and/or tourist regions. Generally,
the development perspectives in for Danish peripheries have not improved,
and increasingly the peripheries have to rely on endogenous forces
and resources. This situation is about to worsen when EU in the nearest
future ends the support to the industrial declining regions in Denmark.
From the point of view of the state, the problems of the peripheries
are basically seen as endogenous problems only to be dealt with in
social politics. In
Denmark, the period from the late 1980s until 1994 was characterised
by a recession with growing unemployment and people retiring from
the labour market. At the turning point the unemployment rate was
12,4% and the share of social benefit recipients as a percentage of
the active population was 28% (1995) compared to 23% in 1990 (Table
1 below) (Statistics Denmark 2004). Particularly, it was the share
of persons in job training schemes and early retired persons that
have increased tremendously. The effects of the recession were especially
strong at Zealand, the islands and in the northern and southern Jutland
(Ministry of Interior 2004). This
picture changed when the growth period began in 1994. Since then employment
and population growth have been highest in the Copenhagen labour market
region and in the regions of the greater cities Aarhus, Aalborg and
partly Odense (Fig 1) (Ministry of Environment 2003). The labour market
regions of the cities between 30.000-100.000 inhabitants also show
a clear progress. The small and medium sized cities and especially
the very small ones are generally characterised by minor increases
or decline. Fig. 1: Population development in Danish municipalities
1989-2004 Inhabitants in Danish municipalities (growth in
percent 1989-2004). Peripheries are regions dominated of municipalities
with a decrease of 5 %. The map also shows the five major economic
growth regions (ellipses). The island of Bornholm, east of Sealand,
is not shown on the map. The decrease of inhabitants at Bornholm is
above 5% from 1989-2004. For
the whole period these trends add up to a more or less continuous
“belt of growth” stretching from the greater Copenhagen
region (a great part of Zealand), parts of Funen to East-, Middle-
and West-Jutland, including a part of northern Jutland related to
Aalborg (see also the Ministry of Interior 2004). Those regions have
a proportion of persons living from social transfers around or below
average (Fig 2). Fig.
2: Recipients of social benefits in Danish municipalities 2003 The island of Bornholm, east of Sealand, is not
shown on the map. The number of recipients as a percentage of inhabitants
(age 18-66) at Bornholm is 27 %. The
growth of these regions is partly based on the knowledge-based services
(especially the greatest cities), while particularly in the smaller
and medium sized cities growth is based on different industrial clusters
like food, furniture, IT, steel and windmills (Ministry of Industry
2001). The regions outside this “belt” have been less favoured
in the growth period. The increase of employment has been less significant
or in worst cases the decline has even continued. As a result, the
level of labour market maginalisation is still high in the peripheral
regions and clearly higher than the national average. The “marginalized
Denmark” is to be found especially in northern/north-western
Jutland, parts of Funen and the nearby islands, parts of western Zealand
and it includes the islands of Lolland, Falster, Møn and Bornholm
(see Fig 1 and 2). Our case Nakskov (western Lolland) is among the
“worst” cases. Since
the beginning of the 1980s, the town of Nakskov - a town of about
15.000 inhabitants situated on the island Lolland in the southeast
peripheral part of Denmark, has experienced a constant shrinkage in
terms of employment and number of inhabitants due to a long period
of stagnation and crisis. Fig.
3 and 4: Employment and population development in the Nakskov region The
situation worsened significantly when the shipyard and other large
production factories closed in the mid and late 1980s. The shipyard
closed in 1986 due to the decision of the Copenhagen-based owner.
As a result Nakskov lost its largest employer. In 1986, when things
were at their worst the unemployment reached 35 % among skilled workers
and 40 % among unskilled workers. With high unemployment and many
people on social welfare (Fig 3 and Table 1), Nakskov and Lolland
turned into dependants of money from richer municipalities through
the Danish equalisation system. The
region received several grants and financial support from the EU co-financed
by the Danish government, as well as from local funds. Several development
projects were initiated as well. The first ambitious local business
plan was launched already in 1986. Essentially, the goal was to create
skilled jobs for the large share of skilled workers who were unemployed
when the shipyard closed. In the beginning, the focus was on creating
industrial jobs and re-employing the former shipyard workers. Jobs
in the tourism sector were neglected as not being “real jobs”,
revealing a mental lock-in of local strategy-makers. One strategy
that failed was to convince Nordic manufactures to locate in the region.
Another element in the business policy, strongly supported by the
EU, was to create a new high-tech centre, that however later turned
out to be worthless in terms of creating sustainable jobs (Nelleman
Consults, 1993). Several initiatives failed because they had to follow
the “EU-mantras” e.g. like the high-tech centre, which were
not adapted to local conditions, in order to get support. Many of
the remaining initiatives failed because the general focus changed
in a way that made the achievements of grant financing to a target
of its own, typically involving professional “project makers”.
Generally, most of the many attempts on creating growth and employment
that were relying on exogenous support created only a limited number
of sustainable jobs in the region because their survival were dependent
upon the subsidies (Development Chief, Municipality of Nakskov). In
1998, after more than a decade suffering from the dark side of economic
transition, a united city council decided that creative measures were
needed in order to change course. The city council, which was lead
by a new mayor from the Socialist Peoples Party who came into office
in 1997, ending 84 years of social democratic rule, decided that the
town should invest themselves out of the problems. “We
could not just sit and wait for a miracle to happen. We had to make
it happen ourselves“ (Chief Executive, Nakskov municipality).
The ambition was to build a completely new industrial base where
energy, environment, recycling and heavy industry all should influence
the nature of future industrial development for Nakskov and the surrounding
region. Thus, the city council decided upon a proactive,
endogenous development-strategy. The goal of creating local jobs of any kind was the highest priority. Nakskov should stick to what
was its traditional base and stay a workers-city. Important for putting the new strategy into motion
was a new chief executive and a development manager with a large network
to private business leaders in Denmark and abroad. This “dynamic
duo” and the new mayor introduced a new and more flexible management
style and also set up a development section closely connected to the
mayor’s office. At the same time, a team of external advisors
was connected to the development section to support the start-up process
and later advising in technical questions (Consultant, Carl Bro Consults).
Fig. 5: Nakskov Industry- & Environmental Park
and the former shipyard area where the windmill producer Vestas is
located In
1999, the master plan for Nakskov Industry- & Environmental Park
was made, forming out a new overall structure for the harbour area
and adjacent areas. Already during the preparation of the master plan,
the Danish windmill producer Vestas, who needed a new site to produce
wings for windmills, showed interest. This interest had been stimulated
with investigative work by a group from the municipality of Nakskov,
counting the new mayor, the new chief executive and a few civil servants,
who actively searched for enterprises in need of adequate harbour
capacity which fitted into the concept of “green industry”.
When Vestas, the worlds leading windmill producer, in the closing
moments of their decision-making process had to choose between Nakskov
and a few other cities, the group from Nakskov decided to play an
extra card and offered to spend an extra 5 mill. DKR (about 800.000
EURO) on top of the EU support for preparing the production site for
Vestas. That extra offer and the quick decision by the municipality
convinced Vestas to establish in Nakskov (Director, Vestas). Less
than three months later, the blueprints for the new site were ready.
The municipality started to make the area ripe for development and
removed contaminated soil as well as old concrete, and in June 1999
the construction of the Vestas factory of 20.000 m2 began.
In the meantime, the local labour market council and the vocational
training school established a temporary training-camp in Nakskov and
about 700 persons received sufficient training for working at Vestas.
In December 1999 the factory started production. Shortly after, the
staff was enlarged with more than a hundred persons. As new subcontractors
started up, even more jobs were created. More
chances, some would say risks, were taken in January 2000, when the
municipality took a loan of 100 mill. DKR (about 14 mill. EURO) and
bought the entire former shipyard area. The aim was to build up a
maritime logistic centre on the site. The municipality had to raise
local taxes to pay the loan. Later, as a part of the master plan,
Nakskov and the neighbouring 3 municipalities bought the farm property
next to the harbour area and the area expanded heavily. Subsequently,
companies have been attracted from the local area, but also other
parts of Denmark and from abroad. Some of the companies have later
intensified their commercial relations, e.g. as subcontractors to
Vestas. Other synergy effects have been created, e.g. between the
local power plant that uses waste products from a sugar producing
plant. Also, sections of the recycling site have been used by the
Danish Technical University and private engineering companies to do
full-scale experiments for developing new methods for cleaning contaminated
harbour soil. Thus, new knowledge flows are being brought into town,
new knowledge that the technical staff at the municipality also gets
access to. Today, representatives from the municipality’s technical
department are travelling throughout Eastern Europe hoping to sell
the new acquired technical expertise. Furthermore a recycling station
for local citizens also functioning as a public park, suited for concerts,
surrounded by ramparts made of contaminated soil from the harbour
area, has also been developed. The
general positive development in Nakskov in recent years indicates the importance of mobilising all important local actors,
and that these actors have to work together and be directly involved
if something is to be achieved. In Nakskov decision-makers have realised
that a good position in an increasingly competitive environment requires
proactive and sometimes quick actions, and the capacity to make these
actions. By taking chances - however chances taken according to a
strategy that has been clarified on beforehand, it has been possible
to create premium physical conditions for local business development,
at least for a certain period of time. With globalisation, things
are not just given – the example of Nakskov shows that it is
possible to influence the local development path in a certain direction.
During the spring of 2004, the persistent vulnerability showed its
face again when Nakskov was hit by a series of company closures and
job losses, including jobs at Vestas and at a local subcontractor.
Recently it was announced that Vestas do not plan to enlarge the production
in Denmark (Director Vestas), meaning that no additional jobs should
be expected at the Nakskov plant in future. So, the employment started
to decrease again and the unemployment is currently at more than 10%
as opposed to the national average of about 6 % (June 2004). Seen
in a longer perspective, the jobs created in Nakskov have been few
compared to the number at beginning of the decline in 1986. Many people
have left the area, have retired or have left the labour market in
other ways. Generally unskilled jobs have replaced skilled jobs. In
employment terms it seems premature to talk about a turning point
yet. Today,
there is a general understanding in Nakskov that a dependency on a
few industrial employers with vulnerable and simple jobs exposed to
the global competition has to be avoided. Two new focus areas have
been identified, agricultural industry and tourism. The town still
waits for a breakthrough in these areas. However, creating diversification
is difficult because Nakskov basically lacks companies, educational
and scientific institutions and manpower needed for knowledge driven
high-skilled production. Nakskov is also in short supply of e.g. cultural
offers that make a city attractive to a high-skilled labour force
(Director, Vestas). In addition, the level of public service is relatively
low, partly due to a stepwise reduction of the hospital and lack of
higher education facilities. Nakskov offers a beautiful natural environment
and good harbour facilities for leisure activities, but the built
environment of the central city needs to be upgraded in order to be
competitive. Urban renewal has recently gained importance and the
municipality has lately used considerable finances to face the challenge.
It is questionable if Nakskov can rely exclusively on an employment
strategy without a comprehensive development strategy. But can the
town afford to have one? Recently, the mayor announced that the municipality
almost went broken because of the loans taken to regenerate the harbour-area,
and because the funds from the national equalisation system have diminished
due to the recent improvement in local employment from 1999 to 2002.
As a result, the municipality has raised local taxes and reduced the
local public service-level. Concluding,
it is too early to talk about a sustainable turn in Nakskov in terms
of economic development and in terms of creating jobs. We can talk
about breaking out of a mental lock-in – from generally being
resigning to being reacting. In relation to this there has been a
substantial increase of local institutional capacity. The municipality
and other central actors have proved that they, with proactive measures,
are able to shape the development path of the town. They have shown
will and courage to make substantial investments (tax-payer’s
money) in an attempt to put the development back on the track in a
period of increasing uncertainty. But it is too early to say if the
investments will pay off in the long term. The latest decrease of
employment and number of inhabitants can either be interpreted as
a temporary disturbance of the positive development starting with
Vestas, or it can be interpreted as the continuation of a long-term
decline. For
Denmark as a whole, socio-economic backwardness in the peripheries is
an enduring problem. Increasingly, due to the changes in the national
regional policy, the peripheries have to rely on endogenous forces and
resources. However, not all localities are endowed with the capacities
to actively face the challenges created by globalisation. In Nakskov
local actors have learned to live with globalisation. They recognise
the low educational level as a major problem and accept outsourcing
of unskilled jobs as a "must" which makes job creation uncertain.
But the local actors in Nakskov have accepted their uncertain destiny
and regard endogenous industrial policy as the only useful response
to globalisation under the new regional policy paradigm, although positive
results might be of very short term. Andersen,
J.G., Larsen, C.A., Jensen, J.B. 2003: Marginalisering og velfærdspolitik.
Arbejdsløshed, jobchancer og trivsel. Frydenlund, København. Bauman,
Z. 2002: Arbejde, forbrugerisme og de nye fattige. Hans Reitzels
Forlag, København. Beck, U. 2002: Fagre nye arbejdsverden. Hans Reitzels
Forlag, København. Clarke,
J. 2004: Changing Welfare Changing States – new directions in
social policy. Sage Publications. London. Desfor,
G. & Jørgensen, J. 2004: Flexible urban governance. The case of
Copenhagen’s Recent Waterfront Development. European Planning
Studies, Vol. 2, nr. 4. Giddens,
A. 2002: Where Now for New Labour. Polity Press. Cambridge. Hansen,
F. & Abbas, P. 2003: Regulation
of regional employment in Denmark, since the mid 80`ties – A
case of fragmented, decentralised multi-layered governance. Paper
presented at the IGU conference in Lisbon, Copenhagen. Jessop,
B. 2002: The Future of the Capitalist State. Polity Press. Cambridge. Ministry
of Environment 2003: Et Danmark I balance – hvad skal der gøres?
København. Ministry
of Industry. 2001a: Regionalpolitisk Redegørelse 2001. København Ministry
of Industry. 2001b. Kompetenceklynger i dansk erhvervsliv.
København Ministry
of Industry 2003: Regeringens regionale vækststrategi. København. Ministry
of Interior 2004: Regionalpolitisk redegørelse 2004. Regeringens
redegørelse til Folketinget. København Nelleman
A/S 1993: Evaluering af EU-programmerne på Lolland: START-Lolland,
RENEVAL, Mål 2. Viby. Statistics
Denmark 2004: Various material from Statistikbanken. Swank,
D. 2002: Global Capital, Political Institutions, and Policy Change
in Developed Welfare States. Cambridge University Press. Cambridge. Interviews with representatives from Nakskov municipality
and firms located in Nakskov were made in autumn 2003. [1] Regions characterised by socio-economic
backwardness, that means relative stagnation or even decline in
economic and employment terms.Introduction
1. Global challenges,
national responses
2. A new paradigm
of regional politics in Denmark
3. The geography
of growth and marginalisation in Denmark since 1990
4. Shrinking into passivity in the Danish periphery: Nakskov from
1986 until the end of the 1990s
5. Changing the path of development with strategic, but risky, local
action
Putting things
into life – the Master plan of Nakskov Industry- and Environment
Park
Developing Nakskov
Industry- & Environmental Park
6. Nakskov, still
a vulnerable town
Conclusion
References
Interviews