Study: Euro cash has helped rural areas, but gap remains

The village of Lindi in Pärnu County. Dozens of Estonian villages have the same names, which means that some of them will have to change theirs in the course of administrative reform (Lindi küla)
12/2/2015 10:20 AM
Category: Politics

EU funds have significantly helped rural areas in Estonia to develop, but the gap between the more developed and the less developed municipalities remains the same, a study by Praxis and Centari found.

The study was commissioned by the Ministry of Finance and evaluated the use of EU structural funds in rural development projects between 2007-2013.

The study concluded that in most fields, development has been significant. Access to fast internet and an increase in drinking water quality have been boosted the most, while access to and quality of many services, such as grocery stores, markets, bank services, postal services, GPs and education received lower grades. Many of these services or aspects of them, have moved online due to fewer people living in the countrytimes.

Around 3 billion euros of EU funding was used in Estonia through the European Regional Development Fund, the European Social Fund and the Cohesion Fund during the last budget period of 2007-2013. In addition, Estonia received 1 billion euros from the European Agriculture Fund for Rural Development. Per resident, Järva and Tartu counties received the most, Põlva and Jõgeva the least financial aid.

Praxis board member and one of the authors of the study, Katrin Pihor, said there is little understanding in which areas regional development gaps should be tackled and where regions should be allowed to develop faster in specific fields.

The aim of Estonia's rural policy is to stop the population and economic concentration moving toward Harju County. This has not been achieved as population growth has only been recorder in and around Tallinn and in a few municipalities near Tartu, Estonia's second city.

Epp Kallaste, of Centar, said funding was decided on national needs, such as constructing better roads between cities, and on the capability of each separate local government to use EU funds. She said one example of the latter is support for economic activity, where getting EU funding was more dependent on the activity of local businesses and residents rather than regional policy. This meant, she said, that municipalities with a higher level of business activity received the greatest support.

The authors of the report said Estonia should draw up regional policy aims for each area. Local governments should have more say on the use of EU funds. Authors also said often municipalities are competitors for funding, and a county-level policy would help plan funding projects better.

“Use of structural funds should be tied to regional needs. For example, in some regions the creation of businesses needs more help, while in others already existing companies might need help increasing sustainability. One region needs bicycle roads, while another an update to a highway which goes through a settlement,” Pihor said, adding that in some regions developing railroads will help boost organization of public transport but places with lower population density might need other solutions.

Kadri Tali, of the ministry, said that for the 2014-2020 budget period, the ministry has focused on first mapping investment needs and the network of services. Tali said the study clearly shows EU funds helped solve basic needs of people, adding that funds helped to make significant investments into clean drinking water, modern recycling methods, fast internet and quality education and social services.

J.M. Laats

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