The main challenge identified regarding the BSR settlement system is to raise the competitiveness of urban regions at three levels and thus to enhance a polycentric urban system: (a) to make powerful metropolitan regions stronger at the international scale, (b) to promote less dynamic major cities to catch up with those being more successful, and (c) to strengthen medium-sized and not very diversified secondary cities as future growth engines for rural regions lagging behind. The latter will be discussed in the context of rural regions (see chapter V-4).

In all cases, the spatial policy objective is to spread prosperity and ensure cohesion. This can be achieved by initiatives focusing on cities and regions which are most challenged by urban competition.

                     Raise the competitiveness of dynamic urban regions

Competition among cities is growing in the globalised economy. This weakens the potential for leading national cities to rely on their national ‘home market’. The regional strength stemming from their internal (“endogenous”) structures gains importance.

Endogenous growth, in a knowledge society with dominance of qualified service production, relates as basic resources to education and size of labour market. Size determines the degree of diversification, which has become an important indicator for regions’ growth potential.

Successful regional/ local clusters are characterised by:

                     Qualified labour force

                     Clustering of branches specialised in similar fields.

                     Private and public research & development.

                     Strong local networks between business, research, development, and public institutions.

                     Access to financial networks.

                     Confidence and meeting places.

People are more willing to commute within a functional region than between different ones. Improvements in the regional (preferably: public) transport system, keeping travel times below 60 minutes, help to widen local labour markets.

For the exchange of knowledge, and hence for knowledge-based competitiveness, also the potential to travel between regions is important. Transport system improvements resulting in travel times below 2.5 hours are of great significance for the integration between functional regions. BSR countries are called to develop concepts for providing accessibility of local resp. regional centres within such thresholds.

Co-operation of cities within this time range and measures to keep travel times between cities within an attractive time limit support regional development.

                     Counteract concentration

The spatial trend analysis indicated that urban economic growth in the BSR is increasingly concentrated at a limited number of urban regions. In smaller BSR countries/ regions (Baltic States, Kaliningrad region), these are the capital cities. In countries of higher extension, other urban growth centres are developing.

Major urban regions frequently offer better conditions than smaller ones (though there are good counter-ex­amples from non-metro­politan cities, e.g. Poznan in Poland, Tampere in Finland, Aalborg in Denmark) to promote creativeness, to reduce investors risks, to find an open society, to benefit from research institutions, to encounter an innovation climate in public administration and advanced communications infrastructure, and to have access to qualified labour and to diversified services (financial, marketing, trade etc.).

This advantage of major urban centres is further accentuated (particularly in transition countries) by a concentration of foreign direct investment (preferring well established urban regions), of tourism, and of public spending.

Research on economic growth has stressed the role of knowledge and technological spill-over between and within industries. This again favours large cities, where new specialised services from private business find large enough markets.

Such knowledge-intense new small and medium-size enterprises (SMEs) are essential to spread new ideas and experiences.

In secondary (smaller, less diversified) urban regions, local markets are often too narrow. They must serve customers on more than one local market. Co-operation between cities can promote the competitiveness of local service providers.

Specialisation is a promising approach for secondary urban regions to gain a share in economic growth. National decentralisation policies in the higher education and research sector can make an important contribution. The USUN project has proposed to use, where possible, existing ‘tacit’ knowl­edge (competencies based on local production traditions) as a starting point.

                     Promote sustainable internal urban structures

There is a tendency for decentralised growth in metropolitan regions. Households start to move out, jobs gradually follow within services related to the growing population and later also other types of jobs. The challenge is to manage this growth to avoid suburbanisation and urban sprawl.

Urban sprawl is characterised by spatial expansion of cities, reduced density, growth of individual vehicular traffic and retreating public transport.

Negative effects of urban sprawl are environmental degradation, growing land-use for parking and for street areas, invasion of valuable landscapes, rising cost of infrastructure and public services supply, loss of urban identity and attractiveness.

Large shopping centres often flourish in the suburban areas, relying on accessibility by private cars. In some countries, e.g. Denmark, Finland and Germany, spatial policies try to limit the trend for such new shopping areas.

Urban sprawl is often coupled with inner city dereliction, due to low private investment into central locations: population, consumer services, and later also offices move away. This may turn into a downward spiral.

Multi-core urban structures can contribute to avoid negative forms of urban sprawl. They are more efficient, from economic, social and environmental viewpoints, than mono-centric urban structures. Multicore urban structures are related to accessibility. Rail transport favours concentration. Accessibility only by cars favours a dispersed structure.

Urban management is needed to promote liveable cores with urban qualities and broad businesses clusters. If the urban change process is left totally to the market, new cores tend to become too small.

Urban regions in transition countries have the advan­tage of a concentrated settle­ment structure and well developed networks for public transport. But by being mono-centric instead of multi-core, they run an even higher risk of urban sprawl than major cities in the
W-BSR. Financial restric­tions tend to support this negative trend by promoting ‘cheap’ short-term instead of cost-effective long-term measures. Thus, the development of multi-core structures is urgent if the advantages of concentration and strong public transport systems are to be maintained.

The above problems are common to the majority of BSR countries. Though solutions have to be found according to specific local conditions, prolonged exchange of experience will be valuable.

The USUN project has proposed to develop alternative models for sustainable urban development based on E-BSR experience with more dense cities in which urban structure, urban transport and service provision are closely interconnected.

The proposed concept

Networking between cities, normally within the same macro-region, enhances the combined strength of different partner cities forming ‘urban clusters’. National policies can provide a favourable framework for urban regions to cooperate across borders.

There is a long tradition in urban networking in the BSR including classical city partnerships and twinning arrangements. It gained momentum during the last decade, and is supported by the Union of Baltic Cities (UBC).

A principal purpose of this type of transnational networking is exchange of experience and mutual inspiration. No particular VASAB intervention is required, unless VASAB wants to promote exchange of experience on specific issues.

But the VASAB project USUN (Urban system and urban networking in the BSR) suggests that there is scope for more joint action of urban regions across borders. This needs further operational clarification to be developed through concrete co-operation experience.

Examples for urban regions with a potential for transnational networking

The following list of urban regions is not exhaustive:

                     Finland - Estonia: Helsinki - Tallinn

                     Finland - Russia: Petrozavodsk - Joensuu - Oulu

                     Germany - Poland: Stralsund - Greifswald - Szczecin

                     Poland - Russia - Lithuania - Sweden: Gdánsk - Kaliningrad - Klaipeda - Karlskrona

                     Poland - Belarus: Bialystok-Grodno; Brest - Kobrin - Biala Podlaska

                     Poland - Lithuania - Belarus: Warsaw - Vilnius - Minsk

                     Latvia - Belarus: Daugavpils - Polotsk/ Novo Polotsk;

                     Lithuania - Latvia - Estonia: Vilnius - Riga - Tallinn;

                     Sweden - Latvia - Estonia - Russia - Finland: Stockholm - Riga - Tallinn - St. Petersburg - Helsinki

                     Germany - Denmark - Sweden: Hamburg - Copenhagen - Malmö - Lund

                     Germany - Sweden: Berlin - Eberswalde - Greifswald - Stralsund - Malmö - Lund

                     Germany - Poland: Berlin - Warsaw - Poznan - Gdansk

                     Norway-Germany-Sweden-Lithuania-Belarus: Oslo - Berlin - Stockholm - Vilnius - Klaipeda - Minsk

                     Finland - Sweden: Helsinki - Turku - Aland - Mälardalsregion; Lulea - Haparanda - Tornio- Oulu.

Potential co-operation projects

Co-operation projects will normally not require VASAB involvement. But VASAB may consider to support the use of seed money within Interreg III B for preparation and operationalisation of co-operation projects.

Fields where urban networking can be useful are, for example:

                     Common marketing;

                     Cooperation of major commercial ports - while still competing in other fields - on the development of ferry lines and feeder systems for container shipping as well as port hinterland links.

                     Cooperation of small harbour towns (frequently former fishing ports) in the development of boat tourism including joint marketing (Interreg project SuPortNet).

                     Joint promotion of mutual transport links integrated with TEN infrastructure.

                     Joint promotion of exhibitions and trade fairs rotating between cooperating urban regions.

                     Promotion of innovation through joint action for research & development, information and communication technology, technology parks, university co-operation, business-research networking.

                     Exchange of experience on national urban clusters.

                     Cooperation of metropolitan regions to identify key issues for promoting cross-Baltic integration.

                     Cooperation of medium-sized cities outside national cores to elaborate urban or regional strategies.

                     Strategic networking of major BSR cities functioning as gateway cities.

The main transnational actor regarding the urban system in the BSR is the Union of Baltic Cities (UBC). Other relevant organisations which may be involved include the EU Commission and its Interreg/ Phare/ Tacis programmes, the BSSSC and CPMR.