Regional governance boosts economic success, says report

The economies of Europe's decentralised countries regions are performing better than those of highly centralised states, according to a new report.

A study from the Assembly of European Regions (AER) published on Monday found higher levels of GDP and growth in regions with more competences.

AER secretary Klaus Klipp told reporters that the study proved the importance of regionalism.

"Realistically a lot of countries are very centralistic," he said. "You could say that centralism hampers development at the cost of citizens."

He added, "The application of the subsidiatry principle is key to economic success.

"A country's economic performance can be improved by more decentralisation.

"In the economic downturn we are facing, I think it's time rethink our priorities for economic development."

AER president Michèle Sabban said the findings were set to "open a crucial debate, particularly among policymakers in highly centralised countries, as Europe struggles to reverse the effects of the global economic downturn".

"We need long-term solutions to the economic crisis," she added. "And that is why national and regional governments must agree on an optimal balance in their distribution of powers, one that maximises their territories' economic growth potential.

"These results prove definitively what AER has known anecdotally for a long time: that the economies of regions with greater competences are performing better as a result than those within more centralised countries."

The research, carried out by the independent Bak Basel institute over two years, compiled a "decentralisation index" taking into account the key indicators for dispersing power.

Based on these assessments Switzerland, Germany and Belgium came top of the index, while Bulgaria, Greece and the Baltic states were at the bottom.

According to the report, regions are more effective in understanding the needs of their citizens and more familiar with local circumstances and therefore more efficient.

Bak Basel director Urs Müller said, "Decentralisation has a positive effect both on GDP capita and on GDP growth.

"The higher the financial decentralisation the better for innovation capacity.

"We really can learn that there is a clear positive impact on GDP levels and GDP growth."

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