Regional Analysis for European Structural and Investment Funds on the Case of Slovenia-Austria Cross-Border Cooperation 2014–2020

In 2012, the EU Commission provided each member state with a country position paper outlining the analysis of the Commission of the main challenges and funding priorities relevant for the European Structural and Investment Funds (ESI) in the programming period 2014–2020, including in relation to European Territorial Cooperation. These position papers have guided the ensuing dialogue with the Commission in particular in relation to the prioritisation of development needs and concentration of support, as well as in terms of the presentation of information. In this chapter, authors are presenting relevant social, economic and environmental aspects of the programme area and describe how the cooperation programme’s strategy in the case of cross-border cooperation between Slovenia and Austria for 2014–2020 period has contributed to the delivery of the Union strategy for smart, sustainable and inclusive growth and for achieving economic, social and territorial cohesion.


Introduction
This chapter examines the relevant social, economic and environmental aspects of the programme area, to define the framework, in which the programme of cross-border cooperation between Austria and Slovenia is implemented.
The regional analysis is divided into thematic areas, which include general aspects such as population statistics and labour market as well as specific aspects such as innovation, research and development (R&D) as well as environmental indicators, referring to community and national guidelines for 2014-2020 and to the Europe 2020 strategy. Identification of strengths and weaknesses, opportunities and threats and, where appropriate, the differences within the programme area is shown in the SWOT analysis, in the third section of this chapter. The cooperation programme's strategy took account of the Common Strategic Framework and the relevant elements of the Commission position paper for the countries involved.
In the chapter, the following is to be outlined: • the geographical coverage of the programme area and an analysis of the situation of the programme area as a whole in terms of the needs', addressing where appropriate, missing links in cross-border infrastructure; • how the cooperation programme will address these needs and challenges and thereby contribute to the delivery of the Union strategy for smart, sustainable and inclusive growth, where appropriate with reference to existing national, regional and cross-border/ transnational/macroregional/sea-basin strategies coherent with the Union strategy for smart, sustainable and inclusive growth, and the ex ante evaluation.
Data used relates to the NUTS level 3. Partly, if no data on NUTS level 3 was available, NUTS levels 1 and 2 data was used, which affects the precision of the analysis.
The border between Slovenia and Austria was established with the Treaty of Saint Germainen-Laye in 1919 and the Austrian State Treaty in 1955. The total length of the land and river border between the countries is 330 km. On May 1, 2004, with Slovenia becoming a member state of the European Union (EU), the border turned into an internal border, which quarantines free movement of goods, capital, services and people. Until December 2007 the Slovenian-Austrian border was the southern border of the Schengen area, which dissolved with Slovenia's membership of the Schengen area. Both events have highly contributed to a more intensive cooperation between the border areas. In Table 1 eligible regions within the programme area are shown.
The programme area covers 38,353 km 2 . The Slovene-Austrian border is 330 km long. The programme area is multifarious and rich in landscape, population and culture. It extends from the Alpine mountain region in the west to the Pannonian lowland in the east.

Population development and structure
The main characteristics of the population development and structure in the programme area are decreasing the number of inhabitants and ageing of population. Urban centres are more inhabited as there are a lot of migrations from peripheral areas to the centres happened in the last years.
The programming region consists of almost 3,500,000 inhabitants. The population structure among the participating regions differs and is presented in Table 2.
A big problem for the whole programme area presents ageing of population, ascribable to a low birth rate and increasing life expectancy. In January 1, 2013, the ageing index for all named regions exceeded 100.

Economic strength
The cooperation area is characterised by dynamic core regions (Ljubljana, Celje, Kranj, Maribor, Graz, Klagenfurt and Villach) with some prospering urban areas on one side, while on the other side, it also has a series of rural and peripheral subregions with a significantly lower level of economic development. Among the NUTS level 3 regions in the programme area, GDP per inhabitant ranged from 11,400 € per inhabitant in Pomurska region in Slovenia to 38,500 € per inhabitant in Graz in Austria.
In terms of GDP per inhabitant in each NUTS level 3 region as a percentage of the EU 27 average, Table 4 shows that in the programme area, there are still regions with an average GDP per inhabitant below the EU 27 average, in Slovenia (except Osrednjeslovenska) GDP per capita is even more than 30% below the EU 27 average. Table 3 shows also the GDP growth between 2009 and 2010. The highest growth rates were recorded in the region West and Südsteiermark (9.5%), followed by Oststeiermark (7.5%), Obersteiermark West (6.9%) and Südburgenland (6.5%). A lot of regions in Slovenia had negative GDP growth in 2010, while the Zasavska region with 1.7% had the most positive growth within Slovenian regions.

Business demography
The following section presents statistical data on business demography in the eligible area on NUTS level 2, 1 treating aspects such as the total number of enterprise births and their survival rates. Business demography is an important subject for discussion about increasing the level of employment, since it is one of the main priorities of the EU growth strategy. The birth of new enterprises is often seen as one of the key determinants of job creation and economic growth. In Table 4, the data on enterprise birth and deaths are presented.
Looking at birth rates in the eligible area, the number of newly born enterprises in the year 2010 in Burgenland was about 797, in Carinthia about 1686. In these two regions, the highest NUTS 3 Regional GDP per inhabitant (current market price), 2010 Regional GDP per inhabitant as a percentage of the EU 27 average (EU 27 = 100)     Table 5.
Also in Slovenia the impact of financial crisis on employment can be seen. Only Osrednjeslovenska with the highest number of persons employed (314,300), followed by Podravska In terms of persons employed by economic activities, there are large differences between the regions in the eligible area. Details are shown in Table 6.  The tertiary sector is especially in the central areas of Klagenfurt-Villach, Graz (Austria) and Osrednjeslovenska (Slovenia) providing jobs for employees.

Unemployment
Unemployment rates differ between the Austrian and Slovenian parts of the region. In 2010, the unemployment rates of all Slovenian participating regions were higher than for Austrian participating regions. Podravska and Pomurska regions had the highest unemployment rate within the programme area. Details are shown in Table 7.  In Slovenia the unemployment rate of women was higher than the unemployment rate of men, while in Austria there was higher unemployment rate of men. Pomurska, Koroška and Podravska regions registered more than 15% unemployment rate of women, while unemployment rate of man was higher than 15% only in Pomurska region.
As already mentioned unemployment rates was much higher in Slovenian regions comparing with Austrian. In Austrian NUTS 3 regions of the eligible area, Graz had 7.6% unemployment rate. In terms of gender gap, women have been more affected by unemployment than men. In 2010 the unemployment rate of men compared to women was 8.4-6.6% in Graz.
Among the Styrian regions of the eligible area, Oststeiermark had the lowest unemployment rate (5.7%) in 2010; especially the district of Weiz contributes with an unemployment rate of Source: Refs. [2,3]. Nace Rev. 2: agriculture, forestry and fishing (A); industry (except construction) (B-E); construction (F); wholesale and retail trade, transport, accommodation and food service activities, information and communication (G-J); financial and insurance activities; real estate activities; professional, scientific and technical activities; and administrative and support service activities (K-N); public administration and defence; compulsory social security; education; human health and social work activities; arts, entertainment and recreation; and repair of household goods and other services (O-U). 4.2% to this positive result. The unemployment rate of women (5.1%) was lower than of men (6.2%).
The unemployment rate within NUTS 3 level was 8.3% in Unterkärnten, 9.0% in Klagenfurt-Villach and 9.8% in Oberkärnten. In all the regions, the unemployment rate was above the average of Austria.
Also the unemployment rate of Südburgenland is above the average of Austria, which recorded an unemployment rate of 8.3%; the unemployment rate of woman with 7.8% was lower than those of men with 8.6% in 2010.
2.5. The regional innovation system: education, research and development and innovation potential

Education level
The strategic framework for European cooperation in education and training adopted a benchmark to be achieved by 2020 that the share of early leavers from education and training should be less than 10%, a level already reached in 2011 by the eligible area regions [5]. Early leavers from education and training may face heightened difficulties in the labour market; data is presented in Table 8.
In Slovenia in the year 2012, 4.4% (EU 27 12.8%) of those aged 18-24 were early leavers from education and training, with at most a lower secondary education. The overall share of early leavers from education and training fell by 0.7 percentage points between 2008 and 2012; the share was even lower in Zahodna Slovenija [6]. In Austria the share of early leavers from education and training was higher than in Slovenia; Styria, however, had a large reduction of 3.2 percentage points between 2008 and 2012.
The strategic framework for European cooperation in education and training was adopted in May 2009. It sets a number of benchmarks, including one for tertiary education, namely, that by 2020 the proportion of 30-34-year olds with tertiary educational attainment should be at  least 40% [7]. Just over one-third (35.8%) of the population aged 30-34 in the EU 27 had a tertiary education in 2012. In Table 9 population aged 30-34 with tertiary education in Austria and Slovenia is presented.
In Slovenia the proportion of 30-34-year-old men and women with tertiary educational attainment was already 39.2% and even higher in Zahodna Slovenija with 42.7% in 2012. Vzhodna Slovenia increased the share of 30-34-year olds with tertiary educational attainment by 10.0 percentage points between 2008 and 2012. Austria, as a well-performing economy, scores low, especially the NUTS 3 level regions, reaching at least above 20%, with the exception of Burgenland, which reached 18.0%. This is linked to their different education systems.

Research and development
The size of the research and development expenditure shows small differences at member state level. According to 2011 Eurostat data, R&D spending in terms of % of the GDP was 2.75% in Austria, while in Slovenia spending was below 2.47%, both countries spending higher than EU 27 average (2.02%).
Breaking down R&D expenditure by sector, the business enterprise sector in Austria with 1.90% spending is among the best performing among member states in this respect (almost 150% of the 1.29% EU 27 average), while Slovenia, with 1.83%, is also in the higher half of the EU 27 member states. Government spending shows bigger difference between Austria and Slovenia (0.14% for Austria and 0.35% for Slovenia). Data for the higher education sector shows that the sector is more active in R&D in Austria (0.73% GERD), less in Slovenia (0.29% GERD).
However, in Slovenia and in Austria, total internal R&D expenditures show some local differences. Details are shown in Table 10.
Steiermark in Austria and Zahodna Slovenija in Slovenia have a prominent position with gross domestic expenditure on R&D as high as 4.6 and 3.10% in 2011.  Austria's more advantageous position in the field of R&D is also clear in terms of researchers in full-time equivalents (FTE). The data about R&D personnel is shown in Table 11.
In Slovenia the total number of FTE researchers was 15,269; in Austria it was 61,170 in 2011 [3]. The number of R&D personnel is increasing over the last years; nevertheless all NUTS 2 regions could increase the number of R&D personnel.

Innovation potential and innovation policy
Innovation is often considered key to maintaining our competitiveness on the global market, creating jobs and improving the quality of life. One of the main objectives of European policies is to encourage innovation in Europe, by providing incentives to stimulate and improve this economic driver [8].
As it can be seen from Table 12 among the eligible areas, the higher shares of innovative enterprises during the period 2008-2010 were observed in Austria (56% of all enterprises); in line with Carinthia, which has the same amount of innovative enterprises. In the EU 27 member states (excluding Greece), more than half of all enterprises (53%) reported innovation activity; hence, Austria reported innovation activity above, Slovenia below the EU 27 average.
As regards the types of innovation that enterprises engage in, Table 13 shows innovation broken down by three categories of innovators: product and/or process innovators only (excluding organisational and/or marketing innovation), organisational and/or marketing innovators only (excluding product and/or process innovation) and enterprises that developed both categories, product/process innovation and organisational/marketing innovation.
In Austria and Slovenia, as well as in the Austrian NUTS 2 regions, the share of innovative enterprises that combine product/process and organisational/marketing innovation is the highest.
In terms of combined product/process and organisational/marketing innovation by size class, Table 14 shows that this combined innovation activities are also developed by a large group of small enterprises. However, it is also important not to lose sight of business structure of the regions, whereas 64% of Austrian and 57% of Slovenian enterprises are characterised by smalland medium-sized enterprises.  Including enterprises with abandoned/suspended or ongoing innovation activities. 3 All Core NACE activities related to innovation activities (B, C, D, E, G46, H, J58, J61, J62, J63, K and M71).

Environment and energy
One of the key goals of the European Union is the protection of the environment and the conservation of the natural heritage like rare and valuable natural phenomena such as minerals and fossils, subterranean caves, gorges, springs, waterfalls, rapids, lakes, bogs, streams and rivers with banks, seaside and landscapes. In order to achieve this aim, the European Union launched various policies, programmes and projects and adopted several environmental legislations in order to diminish air, water and land pollution, to reduce waste and noise and to guarantee an overall sustainable economic, social and environmental development for member state citizens and people beyond the EU border.
Environmental protection is an increasingly important item on the Austrian social and economic policy agenda. Because of the complex nature of the problems related to environmental pollution and the traditional distribution of public tasks among a number of regional authorities, measures for protecting the environment are taken by the federal authorities and by province governments and municipalities [10].
In the field of environment, Austria is one of the leading countries in Europe. The standards in force in Austria are very stringent by European comparison. In the fields of waste management, chemicals or air pollution is related to boiler installations. Also in agriculture ecological criteria have increasingly been taken into account. The Environmental Information Act aims at enhancing transparency in the field of environmental information and access to environmental data. Since 2003 Austria has been a party to the Aarhus Convention, therefore information is available to the public, and the collection of data about the environment is computer based. Austrian legislation is thus increasingly taking citizens' health and environmental concerns into account [10].

of total enterprises
Thereof product/process and organisational/marketing innovation Thereof product/process and organisational/ marketing innovationby size class   4 Including enterprises with abandoned/suspended or ongoing innovation activities.
Due to the implementation of EU Water Framework Directive, the water quality of Austria's lakes was raised to excellent levels. In order to classify the system, a detailed, state-of-the-art computer-based documentation of all Austrian rivers and lakes was prepared. For environmental protection Austria elaborated a national concept for the rehabilitation of protective forests and took the specific steps with respect to emissions of airborne pollutants that led to considerable reductions [10].
Active care of the environment in Slovenia is included into spatial planning and into any other planning of activities affecting the environment. For reducing adverse environmental impact, economic instruments in the forms of environmental tax based on the "polluter pays" principle or an environmental tax reduction in the case of investment in environmental protection have been introduced [11].
With the Environmental Protection Act in 2004, two chapters concerning the control and reduction of environmental emissions and the phasing-out and substitution of hazardous substances were defined. The main aim of the mentioned act is the promotion of development and the use of technologies that prevent, eliminate or reduce environmental burdens.
A lot of areas within the environment and energy can represent a cooperation field within programme area. One of them could be NATURA 2000 areas, another natural park, renewable energy, etc.
In the past 25 years, one of the central working areas has been the conservation of European Union's biodiversity. Beside on that the European Union launched the NATURA 2000 initiative, one of the biggest challenges is to interact the conservation of NATURA 2000 areas with humans' everyday activities. Of course it is crucial that also other policy fields like transportation, tourism, industry, agricultural or energy became sustainable as well [12]. To overcome mentioned challenges, cross-border cooperation for transferring best practices is needed.
One of the cooperation fields could be natural parks, and others could be cooperation for improving air quality, quality of water, reducing the noise and waste, etc.
The air quality has diminished since the industrial revolution. The main cause of the worldwide climate change is anthropogenic greenhouse gas emissions. Negative consequences of these phenomena represent a bear to humans and the environment itself. Health deterioration in a form of lung problems, drought and floods became a part of the everyday agenda. An important step in reducing the anthropogenic greenhouse gas emissions especially CO 2 has been taken in 2005 with the implementation of the EU ETS. Since then, the Slovenian CO 2 emissions have decreased from 20,309 tCO 2 to 19,509 tCO 2 in 2011, and Austria CO 2 emissions have decreased from 92,895 tCO 2 to 82,842 tCO 2 . This thematic field thus represents a possible cooperation area especially as most of the CO 2 emissions come from the industry. Companies from both sides of the border could work together and exchange experiences, thoughts and even technologies in order to make their production environmentally friendly [13].
Very important field for cooperation could also be the renewable energy. Promoting the use of renewable energy sources is important both to the reduction of the countries' dependence on foreign energy imports and in meeting targets to combat global warming.
The data of renewable energy share of gross final energy consumption between 2004 and 2011 is shown in Table 14.
In Austria renewable energy share of gross final energy consumption amounts to 30.9% in 2011 against 30.6% in 2010; this represents an increase of 0.3 point. In Slovenia the renewable energy share of gross final energy consumption fell from 19.6% in 2010 to 18.8% in 2011.
Activities like traffic, constructions or even recreation activities create noise, which can be harmful and unpleasant for humans, animals and the whole environment. Despite that the European Union has taken measures on this topic, noise is a problem, which is considered to be best handled on the regional or local level. Thus this is also an important thematic field, which can be handled within the programme cooperation area.

SWOT analysis
The key strengths, weaknesses, opportunities and threats of the Slovene regions have been identified through: • The analysis of the statistical data • Existing regional and national development plans • Regional analysis Moreover, regional studies and recent direct information of relevant authorities have been taken into regard. Thus, SWOT analysis offers a wider view than the statistics and analyses of the programme area description.
In order to give a clear and complete overview, the strengths, weaknesses, opportunities and threats identified are presented in Table 15 for the main sectors/fields identified in Regional Development Programmes 2014-2020, also highlighting specific issues of individual NUTS 3 areas where appropriate.

Conclusion
Economic growth in the future must be knowledge driven due to globalisation. Technology improvement, upgrading services and cost efficiency are challenges for all countries, and some of them are easier to overcome with cooperation between countries.
Regional and SWOT analyses show a lot of opportunities for strengthening cross-border cooperation between Austrian and Slovenian regions.

Demography
Demographic analysis shows that urban areas in both countries are more attractive to inhabitants [1, 2]. Working and educational opportunities, infrastructure and access to social services and health care are the main factors when deciding the place of living. A modest birth rate combined with a progressing life expectation consequently leads to population ageing, which is a big problem in the whole programme area. On January 1, 2013, the ageing index for all named regions exceeded 100.
Economic analysis of the participating regions shows that there is an increasing need for the economic cooperation and network building in the border regions, especially in areas such as innovation and technological development, research, renewable energy and protection of cultural and natural heritage.

Education, research and development
Good and diverse supply of education on one hand and the problem of lack of knowledge of RDI partners on the other are showing that research and development in the participating regions could play a strong role in cross-border cooperation in the future. Austria has more advantageous positions in the field of research and development, but as both countries are spending for research and development more than EU 27 average and regarding the good infrastructure for research and development in all participating regions, these could present a good base for strengthening research, technological development and innovation. Research and innovation potential together with high educational level of population in participating regions could serve as the basis for cross-border cooperation with an aim of fostering and strengthening innovation activities in the regions.
As a tool for strengthening innovation activities between Austria and Slovenia, networking will be used. Collaboration between the regions' education and business sectors with the innovation poles is here essential.

Competitiveness of SMEs
Due to the fact that 64% of Austrian and 57% of Slovenian enterprises are characterised by small-and medium-sized enterprises, one key driver of sector-oriented economic development is the industry clusters, especially among SMEs. To a large extent, the economic undertakings in the cross-border area are covered by various clusters, which take up the role as key players in boosting the progression of economic and innovation activities due to cross-border cooperation.
The primary objective of the cross-border cooperation in the field of SMEs is to strengthen their competitiveness. Within this aim the following activities should be included: • Transferring the knowledge and technology • Promoting innovation and development of common services

Environment and resources
The global pollution of the environment is exposing the necessity to take precautionary steps in order to protect and preserve the world's resources. Active care of the environment can be seen in Austrian and Slovenian participating regions. Austria is characterised with high ecological awareness, but also Slovenia has shown a great and increasing interest in the field of protecting the environment during the last few years. Rich natural heritage, biodiversity, good capacity for dealing with environmental problems and strong potential for the use of renewable resources are the main strengths participating regions have in the field of environment and energy; therefore cross-border cooperation in the mentioned fields could play an important role in the next period.
Close cooperation between regions will be useful for transferring know-how and thus for implementing cross-border solutions in the field of environment and resources.

Institutional capacity and an efficient public administration
According to the EC, "the quality of public administration has a direct impact on the economic environment and is thus crucial to stimulating productivity, competitiveness and growth" [14]. Consequently, the need for increasing the efficiency and effectiveness of public services and the increased quality of public administration should also be one of the areas for cross-border cooperation between Slovenian and Austrian regions.
Strengthening existing networks as well as the creation of new ones is highly important. Therefore, as already mentioned, novel opportunities should be establishing in order to encourage and foster administrative cooperation as well as cooperation between inhabitants and institutions.
One of the objectives within this field will indubitably be the decrease of administrative burden and thus the contribution to a more effective communication between inhabitants and public sector organisations.