While lagging behind in EU comparison, regions at the eastern external EU border differ in many respects relevant for business development. This includes effective border realities, population and economic structures, R&D and institutional conditions and natural resources to name a few. In addition to inter-regional differences there are many intra-regional differences.

ESPON research shows that external border regions typically benefit less from ERDF or similar business support than many other regions of the same country. This holds true, for support that is either not specifically designated for these border regions or is completely detached from the agricultural sector. Comparing the intra-regional differentiation of entrepreneurial potential with the absorption of ESIF business policy support supports this relation.

Municipalities and regions with a higher entrepreneurial potential as compared to other parts of the same region tend to absorb more ESIF funding per capita than the areas lagging even more behind in these external border regions.

In addition, the low level of absorbed support suggests that it may not be sufficient or suitable to allow these territories to catch up with other parts of their countries. This may require more integrated interventions considering all business development steps, from start-up support to internationalisation.

Local and regional potential is central to develop targeted business support

Apart from the scale that matters for a realistic assessment of socio-economic development impacts, some examples show that business policies in these territories tend to be more successful if they tackle the origins of challenges rather than the symptoms, have a long-term perspective rather than aiming at short-term benefits and are linked to territorial needs and structures.

Adequate business support policies should not only be about direct support, but focus more on creating pre-conditions and enablers. Selection of the enablers to be prioritised and considered jointly and how they should be combined with other direct business support is subject to local and regional needs analyses and individual territorial conditions within existing business eco-systems or beyond. They are not necessarily subject to location at a border, which is one of many relevant conditions.

Geopolitical circumstances and analysis of closing and opening effects along these borders suggest that the focus should be above all on endogenous potential development. A closer look reveals that some of these territories located at the external border would even be by-passed if borders were more open. This may require a change of perspective as it is not only about existing potential but also about enablers to activate the endogenous potential.

Strategic approaches to activate the regional potential

Support mechanisms to stimulate entrepreneurship in external border areas need to be defined individually by these territories. A general strategic approach should consider the specifics of the territory and parts thereof independently of the particularities borders create. This asks for a strategic vision process initiating new policy perspectives and contributing to developing place-based integrated business policies.

This process would favour long-term socio-economic and business development building on regional resources and potential over short-term investments from other regions that are subject to external factors not influenced by regional and local stakeholders.

While attracting investments from other regions is also necessary, it is not sufficient for a regional resilient long-term economic structure. The COVID-19 pandemic has illustrated across the EU the relevance of regional value-added chains for resilience and sustainable development.

Maps: Entrepreneurial potential and ESIF uptake in selected external border regions

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More Information

• Authors: Sandra Spule and Sabine Zillmer, Spatial Foresight
• Photo: Landscape in Latgale, Latvia By Artis Pupins - Flickr, CC BY 2.0, Wikimedia
• ESPON BusDev