Estonia’s national policies remain largely spatially blind. While Estonia’s national strategy (Estonia 2035) contains a target to reduce regional disparities, line ministries generally pursue national objectives with limited regard for their potential asymmetric or differential impacts in regions. In doing so, however, national policy can inadvertently prioritise development in urban areas, as evidenced by the urban concentration of funding for business support and infrastructure. Estonia lacks some governance tools that could promote a stronger place-based approach to regional development, such as a regional development policy or structures for cross-government collaboration that systematically embody regional development challenges or goals. Ministries’ assessment of regional impact – required when introducing new laws and policies – is sometimes perfunctory. To help make national policy more responsive to regional development needs and opportunities, Estonia is encouraged to:
Expand the use of explicit agreements for ministries to work together for regional development. The Ministry of Regional Affairs and Agriculture could enter into contracts with other ministries to formalise how they will work towards complementary goals, particularly those contributing to regional development (including goals in the Central and South Estonian regional development agreements).
Strengthen regional impact assessment. This may entail providing specific training and guidance for line ministries on assessments and introducing accountability mechanisms such as a public “regional impact dashboard” showing expected regional impact of new laws and strategies.
Create space for regular cross-ministerial dialogue on regional development. This could include dedicated sessions for ministers within the Economic Cabinet and a civil-servant-level steering committee focused on regional development to “connect the dots” across sectors.
Subnational actors sometimes lack the necessary financial and strategic capacity that would better support a place-based approach. Own-source revenue of Estonian municipalities is among the lowest of OECD countries, which limits their ability to spend or invest in areas beyond their core tasks. This context helps to explain why the county plans they negotiate occasionally end up listing projects they hope will receive national funding. Exacerbating this tendency are weak connections between national and local governments on regional development, without strong mechanisms to find opportunities for collaboration. With low own-source revenue and a strong prevalence of earmarked grants (81% of grants from the national government), municipalities tend to fill the role of service providers rather than active partners in shaping their regions’ development. To strengthen the capacity of subnational governments to respond to regional challenges and build regional competitiveness, Estonia is encouraged to:
Help municipalities and county development organisations develop strong strategic plans, for example by updating national guidance on county planning to encourage the use of vision setting, scenario planning and prioritisation. This guidance can be supported with a dedicated online hub offering training, templates and examples of good practice.
Harness national and subnational strategic planning processes to find new opportunities for activities to be complementary and mutually enforcing. One way to support this is by expanding the national strategy platform that lists all national strategies to include county development strategies, and mapping how local, county and national objectives interconnect.
The Central and South Estonian pilot regional councils represent a significant step towards policy that is more responsive to the needs and opportunities of the two regions. The councils bring together national ministries, local governments and regional stakeholders to create regional development agreements that define regional priorities, and the activities suggested to realise them. In doing so, the councils have created a new space for shared priority setting, co-ordination and collaboration. To build on this step towards place-based policy for regional development, Estonia is encouraged to:
Broaden national government participation in future regional councils, including by targeting ministries that did not participate in the pilots (e.g. environment, social affairs) by demonstrating shared benefits and coherence across policy spaces.
Make a clear distinction for future regional councils between an initial scoping phase, where council members consult with stakeholders to identify regional challenges and opportunities, and a later negotiation phase, where councils negotiate a final agreement among signatories.
Ensure that future regional development agreements are credible by clarifying who is doing what and with what resources to implement the agreements. Commitments should be accompanied by provisions for monitoring and enforcement to ensure that parties adhere to their commitments.
Conduct an evaluation of the pilot regional councils to assess whether they have met objectives, using quantitative and qualitative measures and involving a broad range of stakeholders. Making the evaluation independent can help to ensure it is objective.
