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Reinventing the Third Way

Kenneth Nordberg
Palgrave Studies in Democracy, Innovation,
and Entrepreneurship for Growth

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School of Business
George Washington University
Washington, DC, USA
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Kenneth Nordberg

Economic and
Democratic Systems
Reinventing the Third Way
Kenneth Nordberg
Åbo Akademi University
Vasa, Finland

Palgrave Studies in Democracy, Innovation, and Entrepreneurship for Growth

ISBN 978-3-319-40632-9 ISBN 978-3-319-40633-6 (eBook)
DOI 10.1007/978-3-319-40633-6

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1 Introduction: Reinventing the Third Way 1

2 Revolutionising Economic and Democratic Systems 7

3 The Case of Ostrobothnia 59

4 Conclusions: Politics in the Post-Fordist Economy 85

5 Attempts at Regional Mobilisation in a Unitary State:

Two Decades of Learning and Unlearning 91

6 On the Democracy and Relevance of Governance Networks:

The Case of Ostrobothnia, Finland 127

7 Is There a Need for Transnational Learning? The Case

of Restructuring in Small Industrial Towns 157


8 Enabling Regional Growth in Peripheral Non-university

Regions: The Impact of a Quadruple Helix
Intermediate Organisation 185

Epilogue 219

Index 223

Introduction: Reinventing the Third Way

The first difficulty an analyst of society confronts is to define which system

or part of society is relevant for the specific question posed. This is a dif-
ficult task, since the different systems are often intertwined or linked to
each other, and thus, changes in one system may often be derived from
changes in another or many other systems. During the last two to three
decades, the role of politics in society has changed drastically, from a posi-
tion where politics was implemented through nation-building and differ-
ent governmental techniques, such as the development of welfare services,
to a situation whereby the state attempts to achieve growth through mar-
ket control rather than by governing the national territory. In this way,
the influence of the market and economics upon society has expanded,
which affects the possibilities of politics. Consequently, an understanding
of the economic system is now required to be able to study the political
system of today. Similarly, when studying the political system and the act
of governing, this system is obviously dependent also on the social system,
that is the way people act, react and behave. In the academic literature of
governance, which has grown abundantly during the last two decades,
the act of governing has been described as being gradually relocated out
of the hands of the government into more or less flexible and ad hoc
networks of stakeholders. The cause behind this shift is found in changes
in the economic system, in the form of open innovation platforms and
free trade, as well as in the social system, in the form of an increasing

© The Author(s) 2017 1

K. Nordberg, Revolutionizing Economic and Democratic Systems,
Palgrave Studies in Democracy, Innovation, and Entrepreneurship
for Growth, DOI 10.1007/978-3-319-40633-6_1

individualisation and reflexivity of people. Consequently, when examining

the system of governance, the benefit of including both the economic and
the social systems, and not constricting the study to the political system
alone, becomes apparent.
In political science, the incongruity of democracy and efficiency is a classic
notion: that is when increasing inclusiveness, the number of participants and
in turn the level of democracy is raised, while the level of efficiency has been
said to drop proportionally. However, by combining the theories found in
both economic and democratic literature, this study suggests that this does
not necessarily need to be the case. In both strands of academic literature,
increased inclusiveness and participation are viewed as being beneficial and
may consequently be regarded as effective, both economically and demo-
cratically. This blend of economic and democratic theory forms the founda-
tion for the main task of this study, which is to reinvent the Third Way.
The search for a third way between or beyond socialism and capital-
ism may be traced back to the end of the nineteenth century and the so-
called Bernstein debate, following the death of Friedrich Engels, where Karl
Kautsky claimed that capitalistic exploitation eventually leads to collapse
and the establishment of a socialist society, while Eduard Bernstein asserted
that political steering tools, such as the introduction of labour legisla-
tion and universal suffrage, undermine class struggles, thus implying that
political democracy and capitalistic exploitation are contradictory (Colletti
1968). A few decades later, in the 1940s, Karl Polanyi again highlighted
the interconnectedness between the political, economic and social systems
in his acclaimed work The Great Transformation (Polanyi 2001). The shift
Polanyi identified is the rise of the market economy in England in the mid-
nineteenth century, which Polanyi suggested was the first time in human
history that the economic system had been completely separated from the
other systems of society. Polanyi’s general argument is that the economy
needs to be embedded in both society and nature, a notion in direct oppo-
sition to economic liberalism and its idea of self-regulating markets. In
Polanyi’s view, the commodification of human activities (labour), nature
(land) and purchasing power (money) will eventually lead to measures of
social protection, understood as politically enforced regulations restricting
the market. Writing in relation to the economic depression in the 1930s and
the outbreak of the Second World War, Polanyi identified both fascism and
socialism as different models of social protection against the liberal econ-
omy, and while the first completely removed individual freedom, Polanyi
suggested socialism, interpreted as the subordination of the self-regulating
market to a democratic society, as a middle way (Castles et al. 2011: 6–10).

In the 1990s, the concept of the Third Way referred to the model of
action adopted by social democratic parties in Western countries. One
of the forefront theorists of the Third Way was Anthony Giddens (1994,
1998), who regarded contemporary socialism as not corresponding to
the Marxian claim for the need of the abolition of capitalism, since,
by the provision of social welfare, social democratic governments had
already to a great length succeeded in removing the unfair elements
capitalism had given rise to. The Third Way represented the renewal
of social democracy in the 1990s, a response to a changed globalised
world, and concurrently, a response to both the interventionism of the
Keynesian state as well as the idea of the free and unregulated market
of neoliberalism. Thus, the 1990s version of the Third Way could be
regarded as a synthesis of capitalism and socialism, of the state and the
market, advocating egalitarianism, not through traditional redistribu-
tion of income, but by affecting the “initial distribution of skills, capaci-
ties and productive endowments” (Lewis and Surender 2004: 4). While
this was often comprehended as a compromise between capitalism and
socialism, Giddens emphasised that the Third Way was not positioned
between left and right but was beyond left and right, and that the Third
Way rejected top-down socialism as it rejected neoliberalism. According
to Lewis and Surender (2004: 5), all Western countries and their social
democratic parties have adapted their welfare policy in accordance to
the Third Way, with a general restructuring of welfare as a result. In
practice, this has implied cuts in welfare benefits in order to achieve
“targeted means-tested benefits” and “in-work benefits”. The Third
Way views civil society, the government and the market as interdepen-
dent and equal partners in the provision of welfare, and the duty of the
state is accordingly to create a balance between these three actors. The
individual should be pushed to self-help and an active citizenship, while
the state and the market should jointly contribute to economic and
social cohesion.
Consequent to the loss in the election in 1992, the Labour Party in
the UK sought a new strategy to win back its constituency in the upcom-
ing election in 1997, and here, the Third Way seemed to make a good
fit. Tony Blair became one of the front runners of this new left-wing
concept, advocating “social justice” as the new middle way, hoping to
attract voters from both sides of the political spectrum. In practice, the
Third Way has implied a step to the right for social democratic parties and
has consequently been criticised for causing the loss of the leftist alterna-
tive and ultimately for depoliticising politics (see example Mouffe 2005).

This depoliticising of politics is perhaps best illustrated by quoting Margaret

Thatcher, who, when asked in 2002 what her greatest achievement was,
replied, “Tony Blair and New Labour, we forced our opponents to change
their minds.” Thus, it can be argued that the Third Way failed at going
“beyond left and right” and instead, in practice, reduced the options for
voters, and thereby contributed to the political apathy visible in Western
societies today. This is the first shortcoming of the 1990s version of the
Third Way. The second shortcoming is that the Third Way was unsuccess-
ful in responding to the demands of individualised, reflexive citizens of the
postmodern age, not being satisfied with merely voting in a mass-party
fashion. These neglects of the Third Way are what this volume wants to
address. As such, the study identifies shifts in economic and democratic
conduct, where a general localisation is visible both in academic literature
and in practice. Accordingly, the attempt to reinvent the Third Way should
not be comprehended as a search for a new full-fledged model of gover-
nance, but as the identification of trends, the illumination of facts and the
suggestion that a new middle way may be found in the decentralisation of
governance. The main issue this study wants to address is what the role of
politics has been, what it is and what it might be in a post-neoliberal future.
The world is constantly evolving. The conditions enabling and restrict-
ing policy implementation are not the same as a century, 50 years or even
20 years ago. By engaging in a thorough theoretical discussion, concern-
ing the evolution of the political and the economic systems (especially
during the last century), this study intends to illustrate the necessity of
synchronisation between these two systems. These changes are not the
result of conscious decisions, that is a master plan conducted by the lead-
ers of the world; instead, they are chance processes caused by a plurality of
events. The next chapter of this study is devoted to this theoretical discus-
sion, highlighting nine megatrends of the economic and political systems
during the last century. The third chapter describes the context of the
case studies, namely the region of Ostrobothnia in Finland and the evolu-
tion of its business and administrative systems. Subsequently, four chapters
follow, offering empirical evidence for the theoretical assumptions, and
finally, a concluding chapter ends the introductory chapters, referring back
to the concept of the reinvented Third Way presented here.

Castles, S., Arias Cubas, M., Kim, C., Koleth, E., Ozkul, D., Williamson, R.
(2011). Karl Polanyi’s great transformation as a framework for understanding
neo-liberal globalisation. Social Transformation and International Migration in
the 21st Century, Working Paper 1, The University of Sidney.
Colletti, Lucio. (1968). Bernstein e il marxismo della seconda internazionale, pre-
fazione a Bernstein 1899.
Giddens, A. (1994). Beyond left and right: The future of radical politics. Cambridge:
Polity Press.
Giddens, A. (1998). The third way. The renewal of social democracy. Cambridge:
Lewis, J., & Surender, R. (2004). Welfare state change: Towards a third way?
Oxford: Oxford University Press.
Mouffe, C. (2005). On the political. London: Verso.
Polanyi, K. (2001). The great transformation: The political and economic origins of
our time. Boston: Beacon Press.

Revolutionising Economic and Democratic


Over the last three decades, two major waves of reform have established
a system of governance popularly labelled the New Governance. This con-
cept refers to one of the megatrends in industrial societies, the shift from
government to governance. Generally, this shift entails a relaxation of the
authority of the bureaucratic and hierarchic nation-state for the benefit of
“the creation of a structure or an order which cannot be externally imposed
but is the result of the interaction of a multiplicity of governing and each
other influencing actors” (Stoker 1998: 17). The first wave emerged in
the 1980s, when neoliberalism and rational economic theories were intro-
duced in public service through the concept of New Public Management
(NPM). The second wave of reform was largely a response to the first wave,
whereby system and network theorists tried to make sense of the network
society that had emerged. Both politicians and the government saw a tool
in these theories for managing and steering the plurality of institutions and
networks that were involved in public management following NPM (see
e.g. Bevir 2010: 12). In other words, the first wave aimed at achieving
efficiency, while the second wave sought improved steering. Consequently,
the shift from government to governance has brought about a room for
manoeuvre at the local level, i.e. bottom-up processes, that was not pres-
ent earlier, at the same time as new kinds of steering processes restrict
actions in ways that are difficult to interpret or predict in advance. In
what ways is this new concept of governance influencing, for instance,

© The Author(s) 2017 7

K. Nordberg, Revolutionizing Economic and Democratic Systems,
Palgrave Studies in Democracy, Innovation, and Entrepreneurship
for Growth, DOI 10.1007/978-3-319-40633-6_2

democracy, legitimacy and efficiency? The assumption for this chapter is

that New Governance and governance networks have been constructed
as a consequence of changes in both the economic and political systems,
and that New Governance accordingly has become the centrepiece of eco-
nomic and democratic theory development. As mentioned, benefits for
both democracy and economy of increased bottom-up processes are found
in the academic literature, and when combined, suggest that an increased
room for manoeuvre for these kinds of processes may offer both economic
and democratic gains. Let us now take a look at these theories.


The term democracy originates from the fifth century BC Greek word
demokratia, which translates to “rule of the people” (demos=people,
kratos=rule, power). The antonym is consequently aristokratia, or “rule
of an elite”. In the everyday use of the term democracy, we usually refer
to the concept of liberal democracy, with generally accepted virtues such
as human and civil rights, political freedoms, representative government
and freedom of speech, rather than the classical perception of the rule of
the people. Liberal democracy traces back to the Enlightenment in the
eighteenth century and was first put into practice by the Founding Fathers
at the Constitutional Convention held in Philadelphia in 1787.

2.1.1 From Classical to Liberal Democracy

One fundamental difference between classical and liberal democracy is that
while classical democracy is aimed at defining “the common good”, liberal
democracy pursues equal individual rights to freedom and self-development.
Additionally, liberal democracy implies a sharp division between a legally
protected private sphere and a public sphere for collective decision-making,
backed up by a coercive state (Sörensen and Torfing 2009: 52–53). As
such, liberal democracy entails a new interpretation of democracy based on
three factors (according to Sörensen and Torfing 2009: 52):

1. The nation-state is the natural demos.

2. Representative democracy is the only way to ensure political equality.
3. The purpose of democracy is to serve the individual rather than the

The general concept is that the society consists of free individuals,

which makes democracy a trade-off between collective decision-making
and individual liberty. This develops into a tension that is characteristic of
liberal democracy, namely whether strong citizen control or the ability of
the government to act efficiently for the benefit of the people should be
given priority (Sörensen 2012: 511). Whilst these factors are general for
liberal democracy, there are different interpretations of the liberal idea as
well. The first to emerge was protective democracy, which in contrast to the
classical view did not see democracy as a device to enable citizens to par-
ticipate in political life, but rather as a tool by which citizens could protect
themselves from encroachment by the government (Heywood 2013: 95).
Later, developmental notions of democracy entered, which regarded the
citizen as free only when they are able to participate directly and continu-
ously in shaping their community (Heywood 2013: 96). Participation and
deliberation are seen as vital for developing the people into becoming
democratic citizens who see themselves as part of a shared community
rather than self-interested individuals (Sörensen 2012: 511). Thus, devel-
opmental democracy advocates the modern idea of participatory democ-
racy, but, similar to protective democracy, sees the nation-state as the main
demos, a fact that differentiates it from the post-liberal democratic theo-
ries which we will return to later on.
A parallel distinction of liberal democratic theory is offered by James
G. March and Johan P. Olsen (1989: 117–142), who identify aggregative
and integrative theories. Aggregative democracy has been the dominant
notion, regarding democracy as a means to regulate interaction between
individuals, namely the aggregation of preferences through voting and
the balancing of powers. Thus, aggregative democracy is all about fixed
institutions, while integrative democracy on the other hand focuses on the
interactions that keep society together. Integrative democracy regards the
capability of citizens to influence the decisions affecting them as more
important than having the same accessibility to channels of influence. By
participation, a common identity is constructed, and this should be the
basis for any demos (Sörensen and Torfing 2005: 212–217).
Bernard Manin (2002, English original in 1997) carries through an
interesting evaluation of contemporary democracy by comparing it to the
Athenian classical interpretation and consequently comes up with two
main differences between classical direct democracy and representative

1. The people have no institutional role in representative democracy

2. Classical democracy used the drawing of lots rather than voting.

Athenians used both election by lots and election by voting, the lat-
ter for duties which required certain competences and long-term engage-
ment. The duties that were not appointed to the people’s assembly were
appointed to government officials, of which about 600 of a total of 700
were elected by drawing lots. By comparing the practices of drawing lots
and voting, Manin is able to pinpoint the democratic deficiencies in the
representative system. Manin (2002: 7–8) concludes that drawing lots as a
method achieves a representative selection, in contrast to voting, that con-
sequently by definition, is an elitist, selective process. Liberal democracy
thereby does not correspond to “the rule of people”, but the rule of an
elected elite, or as one of the Founding Fathers puts it in 1787:

The two great points of difference between a democracy and a republic are:
first, the delegation of the government, in the latter, to a small number of
citizens elected by the rest; secondly, the greater number of citizens, and
greater sphere of country, over which the latter may be extended. The effect
of the first difference is, on the one hand, to refine and enlarge the public
views, by passing them through the medium of a chosen body of citizens,
whose wisdom may best discern the true interest of their country, and whose
patriotism and love of justice will be least likely to sacrifice it to temporary
or partial considerations. (Madison 1787–8: 82)

As Madison explains, representation (or republic) was preferred to

democracy firstly because of the size of modern societies, secondly because
of the possibility to elect an elite rather than “the people”. Additionally,
election by drawing lots was rejected because of the perception that the
government needed to be based on the active consent of the citizens to
be legitimate. As Manin (2002) strongly points out, the Founding Fathers
saw a fundamental difference between classical and representative democ-
racy specifically in the sense that the latter is aristocratic (gaining from
the wisdom of a chosen body of citizens, as Madison puts it), rather than
democratic. This difference between the classical notion of democracy and
contemporary liberal democracy is seldom reflected upon today. Instead,
the distance between the elected politicians and the represented seems to
grow larger, a pattern certainly contributing to declining voting turnout
and political participation. The contemporary difficulties of liberal democ-
racy, especially the falling levels of participation, has engaged scholars in

evolving democratic theory beyond liberal democracy, specifically seeking

ways of improving civic engagement and participation. These theories,
which to a lesser or greater extent reject the representative model, are
jointly entitled post-liberal democratic theories, and are a subject of focus
that I will return to later in this chapter. First, however, we need to return
to representative democracy, since this is the system of governance to
which the post-liberal theories react. It is worth noting here, however,
that representative theories have changed since the time of the Founding
Fathers, adapting to a changing society over a period of two centuries.

2.1.2 Representative Democracy

Governance through representatives has its origins in the feudal soci-
ety, where the use of assemblies of estates was expected to give the
people a sense of obligation towards the government (Manin 2002:
98). The founders of the representative system in the eighteenth and
nineteenth centuries explicitly wanted the representatives to be superior
to the represented regarding wealth, talent and moral features (Manin
2002: 106), and this was later also regarded as secured merely by the
mechanisms of election by voting (Manin 2002: 143–144, 148). While
classical direct democracy saw equality as everybody’s equal possibility
to hold office, representative democracy viewed equality as everybody’s
equal right to give or not to give consent to an authority. Consequently,
representative democracy saw the people as a source of legitimacy, not
as persons aspiring for office (Manin 2002: 104). Other significant dif-
ferences to direct democracy are that, after being elected, the repre-
sentatives are able to act autonomously from their constituency, since
imperative mandates are not allowed (representatives cannot be forced
to vote in a certain way in a certain issue) and representatives cannot
be dismissed. When regarding democracy as “the rule of the people”,
these characteristics are principally undemocratic. Still, the notion of
democracy being about equal rights rather than the rule of the people is
supreme today. Why did this elitist representative system receive such a
position on behalf of a genuine democratic rule?
For dealing with the classic trade-off in liberal democracy between
efficiency and democracy, between collective decision-making and indi-
vidual liberty, representation was regarded as a good compromise.
Since efficiency hinders every citizen from having a say in every issue,
representatives are able to speak on behalf of a larger constituency.

Another important feature of liberal democracy that has furthered repre-

sentation is the nation-state hegemony, which has formed the basis for lib-
eral theories for 250 years. Larger or smaller demos than nation-states have
been of subordinate importance, and this circumstance has certainly also
contributed to the supremacy of the representative notion of democracy.
The representative system seemed like a good fit to the industrial
nations that emerged in the nineteenth and twentieth centuries. To get
a further nuanced picture of the characteristics of representation, we will
now take a closer look at the evolution of representative democracy over
the last two centuries. Bernard Manin (2002) introduces parliamentary,
parties and audience democracy as the three stages in the development of
representative democracy. During the larger part of the nineteenth cen-
tury, parliamentary democracy was dominant. Elections were supposed
to appoint persons to government who enjoyed the trust of the citizens.
The candidates won the confidence by their social prominence and with
the aid of networks of local connections. While the maintenance of a
close relationship between the representative and the constituents was
of the essence, the confidence of the people was also based on the fact
that the represented and the representatives belonged to the same social
collective. Parliamentary democracy was explicitly a rule of an elite, the
so-called notabilities. The representatives were free to follow their own
consciousness, i.e. they were not the spokesmen of the voters, but their
trustees (Manin 2002: 218–219).
At the turn of the century, universal suffrage was introduced, which
meant that every representative could not maintain a personal connec-
tion to every constituent, since the number of voters simply became too
large. Instead, the practice of voting for a political party over a candidate
led to the shift to parties democracy. This shift was eventually acclaimed as
the end of the rule of the elite and the possibility for ordinary people to
be elected. However, Manin (2002: 222–223) points out that already in
1911 Robert Michels (2001) illustrated that social democrat voters were
not similar to their representatives, and consequently, the aristocratic qual-
ity was present also in parties democracy. At the same time, modernistic
social science undermined the notion of the state as the common good
of the people. Instead, the actions of elected politicians were increasingly
legitimised by references to experts rather than by the consent of the peo-
ple, hence, the rise of the bureaucratic welfare state (Bevir 2010: 25).
Parties democracy implied voting for parties; in other words, it entailed
party loyalty. This phenomenon is very much explained by the industrial

society and the division of the classes that had consequently emerged.
Accordingly, people voted for the party that most strongly corresponded
to their social class, and then trusted the party to elect favourable candi-
dates. This in turn meant an eradication of the personal contact between
the representative and the people, and therefore the representation came
to solely mirror the social structure of society (Manin 2002: 224–225).
Still, social class voting implied a simplified decision for voters, since party
programmes became a central position within politics.
From the 1970s onwards, a further shift of the representative system is
identifiable, which coincided with the end of the modernist industrial soci-
ety and the start of the post-industrial individualised world. Prior to the
1970s, political views could be explained by socio-economic background,
although this connection has not been as definite since. Instead, the per-
sonal qualities of the candidates have become increasingly important at the
expense of the political party, and accordingly, we again see representation
based on the personal character of the representative (Manin 2002: 235).
There are therefore similarities between parliamentary democracy and this
new system, which Manin calls audience democracy. In audience democ-
racy, the media offers the leaders of political parties a direct contact to the
people, which in turn reduces the importance of the party workers. Related
concepts are mediacracy, introduced by Phillips (1975) focusing on the
mediatisation of politics, and post-democracy, coined by Crouch (2011),
implying “a political system where politicians are increasingly confined to
their own world and are linked to the public primarily through meth-
ods of manipulation, which are based on advertising and market research,
while the external forms of democracy seem unaffected” (Crouch 2011: 7,
introduction to Swedish edition, my translation).
In audience democracy, the front-stage appearance of the politician is
the most important tool for reaching the targeted groups of voters, rather
than engaging in face-to-face discussions with them (de Beus 2011: 23).
The media has in itself also progressively become an independent politi-
cal actor. When politicians earlier set the agenda for journalists, they now
need to meet the demands of media selection and production in order to
get journalistic attention (de Beus 2011: 25–28). In an ever more com-
plex world, it is increasingly more difficult for any politician to act accord-
ing to a fixed party programme, and consequently, election pledges have
become vaguer. Visions of the future are less particular, resulting in an
increase in the liberty of representatives to act according to arising circum-
stances. These predicaments result in a growing significance of the image

and personal qualities of the candidates rather than party ideology or party
programmes (Manin 2002: 236). With the diminishing importance of
party programmes, voters have less opportunity to vote for future policies,
and are left, instead, to judge what has already happened together with the
trust and image each candidate has produced (Manin 2002: 250).
Compared to parties democracy, under audience democracy the parties
have become tools for the service of the party leaders, who form the party
as well as the parliamentary group, the ministry etc. to a permanent cam-
paigning machine in order to ensure that the right party message reaches
the right section of the public (de Beus 2011: 23–24). Simultaneously,
the head of government becomes the most important representative of
the people, rather than the members of parliament. The competence of
handling the media has now become the most important skill of a politi-
cian. In this way, when parties democracy reduced the differences between
the represented and the representative, audience democracy has entailed
a democracy with stronger elitist characteristics (Manin 2002: 249). To
further compare parliamentary and audience democracy, since the first was
obviously elitist, and the latter similarly elects an elite while lacking the
personal connections between the representatives and the voters, the elitist
characteristics are perhaps even more pronounced in audience democracy.
Another characteristic phenomenon of audience democracy is the
mobility of the voters. Prior, mobility was typical for a small number of
uninformed or ignorant voters, but in the age of the knowledge society,
well-informed people are less likely to express party loyalty and are instead
concerned with specific issues. This mobility stimulates politicians to
attempt to direct public debate towards particular issues and increasingly
present propositions directly to the people, through the media. This is a
typical feature of what Manin (referring to Nie, Verba and Petrocik 1979:
319) describes as the reactive dimension of politics, which is characteris-
tic of audience democracy (Manin 2002: 238). This implies that voters
increasingly choose their candidate according to the personality of the indi-
vidual and the issues he or she happens to emphasise, rather than voting
according to class identity, culture or party programmes.
While the decline of the industrial society implied a reduced importance
of voting according to socio-economic belonging, the society is still any-
thing other than homogeneous. Numerous intersecting social and cultural
dividing lines exist, offering politicians, with the aid of media experts, the
possibility to construct divisions of the society suitable to the specific poli-
cies the candidate wants to promote. In this respect, media training, media

monitoring and electoral research become increasingly important, as the

proficiency of spinning the news is decisive for electoral success; in most
cases this is based on popular preferences in polls (de Beus 2011: 23–24).
Of course, although all voting decisions under representative democracy
have been reactive, earlier, the alternatives have, to a larger extent, mir-
rored social reality. With audience democracy, the alternatives are mostly
chosen by the politicians, a circumstance of course multiplying the reactive
dimension of politics. As a consequence, Manin compares the relationship
between the people and the politicians to a theatre, where the politicians
are the actors and directors and the people are the passive audience, hence
the term audience democracy (Manin 2002: 242–243). As we have seen,
the new reign of audience democracy is concerning from a democratic
point of view, with elitism and the difficulty for the represented to influ-
ence future policies as especially worrying features. Still, positive aspects
have been pointed out. Jos de Beus (2011: 34) indicates that the growing
focus of the concerns and interests of the people, by journalists and politi-
cians on all levels, might be beneficial for democracy.
In conclusion, liberal democracy, with a system of representation, is
not democratic in the sense of corresponding to the ideal of “the rule
of the people”. Rather, it is the legitimised rule of an elite, and this is
what we should have in view when using the term democracy today.
Even if there is a significant interest in the opinion of people, displayed
by a growing number of polls, non-stop political campaigning etc., the
election of representatives is an elitist system with a strong element of
top-down steering. Of course, the democratic virtue of polls is a compli-
cated matter, since the selection of questions may not even be relevant
to the individual. When evaluating democratic and economic conduct
through bottom-up processes, which have a far greater potential of cor-
responding to “the rule of the people”, it is obvious that such processes
are difficult to facilitate in a strict hierarchic representative system. With
this in mind, we need to take a look at post-liberal democratic theories.

2.1.3 Post-liberal Democratic Theories

A general understanding of contemporary society that certainly has a
fundamental impact on democracy is the shift from centrism to pluricen-
trism. As Sörensen (2012: 513) points out, there is general agreement
amongst both political and governance theorists that liberal democracies
are becoming increasingly pluricentric. In this regard, Sörensen presents
four reasons for this development (2012: 513–514):

1. Political globalisation refers to the establishment of transnational politi-

cal institutions and public and private organisations, which set new stan-
dards for the conduct of nation-states both internally and externally.
2. The new governance reforms, especially the first wave of the NPM
reforms, led to a debureaucratisation of the state, which fragmented
the political system into a plurality of self-regulating units of public
3. A consequence of the New Governance reforms was a reinterpretation
of private actors (e.g. voluntary organisations and businesses), which
basically implied the diminishing of the division between the governed
and the governing.
4. Another consequence of the governance reforms and the increase of
participating actors was a general acceptance of governance networks, as
both a valuable and legitimate contribution to public governance.

Especially during the last two decades, a growing number of scholars have
been addressing the increasing difficulties that the liberal and representative
notions of democracy are experiencing in the postmodern, pluricentric soci-
ety. These theorists, sometimes called radical democrats, present solutions
that aim, to a lesser or greater extent, towards relaxing the hierarchic system
of representation for the purpose of increasing participation and for coun-
teracting the passivity and apathy that is visible in most Western democra-
cies. Eva Sörensen (Sörensen and Torfing 2005, 2009, Sörensen 2012) has
discussed these new democratic concepts in several publications, labelling
them jointly as post-liberal democratic theories. Although these theories are
disparate on many accounts, Sörensen (2009: 53) identifies three common
difficulties these theories identify in traditional liberal democracy:

1. The nation-state is increasingly becoming unfit to be seen as the only

form of demos; in many cases both transnational and local demos
appear to be more appropriate.
2. Representative democracy has failed in creating a satisfactory interac-
tion between the represented and the representatives, which means
that new functional and/or territorial forms of participation are needed.
3. The strict separation of the private and the public realms in liberal
democracy is a restriction. Democracy should be strengthened through
arenas of governance in between the public and private realms, where
citizens and stakeholders are able to participate in issues affecting them.
This also implies a growing importance of self-governance.

Post-liberal theories acknowledge the passivising effect of the medi-

atisation of politics visible in audience democracy and the consequent
need for new forms of participation. In this respect, scholars identify the
emergence of the pluricentric society, which is in opposition to the uni-
centric notion of nation-states, and concurrently the occurrence of nation-
states with a large number of demos (see Sörensen 2012: 513–518). The
question posed by post-liberal theorists is how and if political decision-
making involving a multitude of demos can be regulated in a democratic
fashion (Sörensen 2012: 510). The solution suggested by most of these
theorists is the linking of self-governance and deliberation on the basis
of self-regulated rules and norms (Sörensen 2009: 54), since the liberal
democratic concept generally only sees the importance of participation
and deliberation for enhancing the sense of communality within a demos,
and not for improving the democratic interaction between democratic
units (Sörensen 2012: 509). Deliberation itself is divided by two differ-
ent understandings, with a Habermasian concept of reaching consensus
through a reasoned debate (Habermas 1984), and a Mouffean notion of
stimulating agonism as a solution to antagonism rather than having con-
sensus as the ultimate objective (Mouffe 2000, 2005, 2013).
As mentioned, the last two decades have been a time of idea generation
regarding democratic novelties. Sörensen and Torfing (2005: 219–227)
have made an attempt of categorising different post-liberal democratic
theories according to the dimensions conflict/coordination and calcula-
tion/culture, resulting in four categories which neatly summarise the vis-
ible post-liberal trends:

1. Power-balance democracy is a reformulation of traditional and aggrega-

tive elite theory in the manner that it sees democracy as a competition
among elites. Accordingly, Eva Etzioni-Halevy (1993) suggests that
the pluricentric society should produce sub-elites, which control the
political elite between elections and additionally form an intermediary
level to assist movement between the citizens and the elites. The asso-
ciative democratic model of Paul Hirst (1994, 2000), on the other
hand, suggests that representative democracy needs a publicly funded
and self-governed association at the local level in order to establish a
vertical power balance between the local level and the state. In this
model, although voting in national elections remains important, it is
supplemented with functional demos, where affected citizens, rather
than all citizens, have access. These theories highlight the importance

of a vertical and horizontal balancing of powers, between elites and

sub-elites, the state and local associations and through the sharing of
powers between the producers and users of services.
2. Outcome-oriented democracy sees democracy as a production of desired
outcomes rather than a manner in which democratic institutions are set
up, and is consequently an integrative approach. The leading theorists
here are Archon Fung and Erik Olin Wright (2003), who in their
“Empowered Participatory Governance”-model suggest that demo-
cratic institutions are effective and produce desired outcomes if they
work according to three principles: (1) democratic institutions should
be designed for the given situation; (2) bottom-up participation of
relevant stakeholders who contribute with insights and engagement
ensures effectiveness; (3) deliberative problem-solving should be used
in order to ensure that the participants find acceptable solutions and
respect each other. To avoid societal fragmentation, Fung and Wright
(2003: 21) also call for centralised supervision.

3. Community-oriented democracy draws from integrative democracy but

differs in the way that the notion of a unitary democratic community,
e.g. the nation-state, is regarded as obsolete. Community-oriented theo-
ries also denounce the Habermasian idea of a reasoned debate with the
aim of identifying a common good, and instead, authors such as March
and Olsen (1989, 1995) and Sandel (1996) see a multitude of compet-
ing communities and identifications, “from neighbourhoods to nations
to the world as a whole” (Sandels 1996: 530), and with the aid of institu-
tions that facilitate a deliberative debate, the citizens are able to navigate
in this patchwork and construct identities, forming shared stories and
linkages between different belongings.

4. Discursive democracy responds to the way liberal democracy regards the

polity as pre-political and thus lets it escape democratic regulation.
Discursive democracy is aggregative in the manner that it understands
democracy as a way of regulating political conflicts and integrative since
it is concerned with the question of how political actors “discursively
construct themselves and others as democratic actors” (Sörensen and
Torfing 2005: 226). John Dryzek (2000) emphasises the facilitation
and regulation of an ongoing discursive contestation as central for an
ideal democracy. Similarly, Mouffe (2000) belongs to this category as
well, with her thoughts of transforming the enemy to the adversary and

antagonism to agonism. Additionally, Mouffe highlights the contin-

gent character of the political, i.e. the risk of aiming at reaching con-
sensus and the common good and thereby overriding contrasting
beliefs (Mouffe 2005).

Table 2.1 summarises the democratic schools of thought presented

above. The point of departure here is the change of definition of democ-
racy; implying actual participation of all (free and male) citizens in ancient
Greece, while the liberal democratic interpretation rather corresponds to
legitimised governance than the “rule of the people”. Notably, the dif-
ferent interpretations of democracy mirror the societies they were pres-
ent in: classical democracy was applicable in the city-states of ancient
Greece, where slaves and women were excluded; liberal democracy
suited the nation-state hegemony; and the individualistic, globalised and
pluricentric postmodern society makes claims for a post-liberal interpre-
tation of democracy. Liberal democracy, on the other hand, has devel-
oped into audience democracy, turning citizens into spectators rather
than participants.

2.1.4 New Governance

As in almost any imaginable field of human life, the act of governing, the
exercising of authority or, in popular terms, the system of governance has
seen substantial shifts since the late 1800s. Then, in the turn of the cen-
tury, developmental historicism, a view where the existence of the state is
explained by the nation, the language, the culture and the past, left room
for a scientific perception of society. Modernism stepped in with rational-
ity, correlations, models and classifications, while the roles of actors and
institutions in the system of the state came to be more important than the
history of the nation, and consequently, instead of seeing the state as a uni-
tary entity, it was comprehended as pluralistic and containing a plurality of
interests (Bevir 2010: 24). Under historicism, the state was understood as
the expression of a nation which shared a common good; under modern-
ism, the state corresponded to rationality. Accordingly, the transformation
that occurred in the first half of the twentieth century involved bureau-
cratic solutions in the form of corporatism or the welfare state, where
politicians to a greater extent leaned on the verdicts of experts than on the
will of the people (Bevir 2010: 25).

Table 2.1 Classical, liberal and post-liberal democracy

Classical democracy
Democracy a device for people to participate, “the rule of people”
Democracy corresponds to “the common good”
Liberal democracy
Equal individual rights and freedoms rather than the common good
Nation-state natural demos
Representation ensures political equality
Protective democracy Developmental democracy
Democracy protects citizens Participation central for development of democratic
against encroachment rather citizens
than participation
Aggregative democracy Integrative democracy
Aggregation of preferences Interaction and participation construct common
through voting and balancing identities
of powers
Representative democracy
Representation compromises between efficiency and democracy
Parliamentary democracy Parties democracy Audience democracy
Close relationship between Collective class Passivation of citizens, polls
constituent and constituency identification and and media exert strong
voting influence on political agenda

Post-liberal democracy
Nation-state contested as natural demos
Acceptance of direct participation of stakeholders
Participation and efficiency not necessarily contradictions
Power-balance democracy Outcome-oriented democracy
Vertical power balance through Production of desired outcomes through ad hoc
sub-elites participatory institutions
Discursive democracy Community-oriented democracy
Democratic regulation and Deliberative debate guides citizens amongst a
facilitation of discursive multitude of competing communities and
contestation identifications

The second transformation of governance occurred in the 1980s, when

the hierarchic government stepped aside for the New Governance. This
shift originated from a perception that the modernist state was in a condi-
tion of crisis, caused by (1) the rigidity of bureaucracy, (2) inflation caused
by the Keynesian economy, (3) the obsolescence of national economic
regulation and policy caused by globalisation and (4) the view of the wel-
fare state causing a rising demand for welfare services resulting in an ever-
growing public sector (Bevir 2010: 27–28).

The First Wave of New Governance Reforms: Neoliberalism and New

Public Management
These factors, and especially the last one, were expressions of ratio-
nal choice theory and neoliberalism, which represented the schools of
thought that formed the first wave of New Governance reforms. This
wave of reforms was an expression of economic rationality found in ratio-
nal choice theory, a fundamental element in the neoliberal notion that
spread around the world in the 1980s. Rational choice theory perceives
social life as humans acting according to their own preferences, commonly
assumed as selfishness, although other preferences are possible. The will
of the citizens is regarded as becoming visible through the choices they
are able to carry out on a free market. Critics, however, imply that only
the consequence of a particular action is visible, not the action in itself nor
the idea behind it (Bevir 2010: 21–22). Moreover, rational choice theory
concentrates on the individual rather than the institution and sees social
facts as the aggregation of interactions between individuals. Neoliberalism
regards the market as indisputably superior to the state in efficiency, and
consequently, since the bureaucratic state is rigid and cannot cope with the
changes of globalisation, it needs to be reduced. One way of interpreting
the changes neoliberals recommend is the differentiation between steering
and rowing advocated by Osborne and Gaebler (1992). Steering corre-
sponds to policymaking, while rowing is the actual delivery of public ser-
vices. Influenced by rational choice theory, neoliberals saw public officials
as acting in their own interest rather than in the interest of the public, and
therefore bureaucratic structures are considered to grow without reason.
Instead, contracts, competition and management by objectives, i.e. char-
acteristics of NPM, should form the rowing of the government in order to
give the state the opportunity to focus on steering (Bevir 2010: 30–33).
Now, decades later, we see that the states have not been reduced by these
measures; rather we see a growing number of networks of actors perform-
ing public service. Thus, the state has identified a need to set up a sort
of monitoring system, an audit system, which has come to form a whole
new branch of the state. As Levi-Feur and Jordana explain, “the era of
neoliberalism is also the era of regulation” (2005: 6). According to Bevir
(2010: 188–189), few studies have been made of audit systems, yet Hood
et al. (2000) concluded in a study of audit agencies in Great Britain that
the number of oversight agencies increased by over 20 % and the quantity
of staff by 90 % between the years of 1970 and 1990.

To sum up, the first wave of governance reforms aimed at improving

efficiency and flexibility, and achieved this by a roll back of the state and
by allowing private companies and public organisations to compete under
regulations laid down by the government. This resulted in a public service
system based on networks with market relations.

The Second Wave of New Governance Reforms: New Institutionalism

and New Public Service
During the age of the bureaucratic state, the scientific view of the state and
public administration was dominated by institutionalism, which focuses
on formal rules, procedures and organisations rather than on individu-
als and the aggregation of interactions, as in rational choice theory (see
Adcock et al. 2007). Following the entry of neoliberalism, scholars strived
to reintroduce the importance of institutions, and consequently we saw
the birth of New Institutionalism (Bevir 2010: 45–51). Again, the focus
was on formal procedures and organisations, albeit with the addition of
norms, habits and culture. New Institutionalism criticises rational choice
theory for its reduction of human behaviour to merely utilitarianism and
for disregarding the influence of norms etc. Among the leading theorists
of New Institutionalism are James March and Johan Olsen, who see politi-
cal institutions as creating identity, solidarity and adaptiveness. In other
words, political institutions shape people’s social values and belief systems
and in this manner form the basis for the norms that people act by (see e.g.
March and Olsen 1995).
Institutional theorists regarded NPM as creating a system where self-
interest prevented public spirit and public service, ultimately resulting in a
denial of citizenship (Bevir 2010: 102). Based on the importance of cul-
ture and norms, institutional theorists advocated for participation, cooper-
ation and democratic debate in order to promote public spirit, democratic
values etc. These theorists thus called for New Public Service (NPS) in the
form of a shift from market relations to collaborative relations in networks,
where the private and voluntary sectors are allowed to participate in poli-
cymaking. Bevir (2010: 104), referring to Vigoda (2002), concludes that
the two waves of reforms responded to the bureaucratic state, which was
neither responsive nor collaborative, and while NPM managed to improve
responsiveness, it totally neglected collaboration, which was what NPS
was really supposed to answer to.

The 1990s and early 2000s saw an abundance of scholarly literature

that viewed the NPM governance systems as a system of networks, where
the state had a few possibilities to control other actors or the development
of society (see e.g. Pierre 2000; Rhodes 1997). In this view, the state had
to focus on steering rather than commanding, a notion that led social
scholars to develop governance networks theory (see Sörensen and Torfing
2007). Theories of governance as networks see networks as flexible solu-
tions able to facilitate social coordination and links between institutions in
a manner that bureaucracy and markets are not.
Regarding participative forms of democracy, it is important to distin-
guish between governance networks that actually do things, and other
participative platforms created as merely advisory forums for the sake of
the representative system. The first are networks with financial or other
resources, primarily gathering people in important positions, and these
kinds of networks often escape democratic accountability. To some extent,
publicly funded development projects might be included in this group.
The latter group are government responses to the reflexive and pluricentric
society, in the form of citizen juries, expert groups, e-petitions and so on,
i.e. platforms without actual influence.

2.1.5 Democracy and New Governance: Metagovernance

Bridging Liberal Democracy and New Governance
The first wave of New Governance reforms was criticised for creating a
structure where the lines of accountability were weak and relying merely
on market mechanisms. Although the theorists of New Institutionalism
wanted to bring back democratic debate and democratic values, in practice,
implemented reforms used institutionalism theory as a way of improving
steering, thereby neglecting the genuine participative ideal. In this way,
the second wave of reforms also aimed at improving efficiency rather than
attempting to establish genuine participation. Current reforms have seen
the addition of deliberative democratic elements, such as dialogue, con-
sensus and participation in different forms. Still, as the EU White Paper on
Governance (2001) exemplifies, new participative features do not aim at
achieving real autonomous local organisations, but at achieving efficiency
and legitimacy by involving affected actors and winning support for deci-
sions (Bevir 2010: 119).

Indeed, the dominant issue of New Governance or governance net-

work theory during recent years has been whether governance through
networks may become democratic and legitimate. The New Governance
has certainly upset the simple arrangement of accountability in traditional
representative democracy, where issues such as inclusivity and legitimacy
of participation have been more or less non-existent. In this regard, Peters
(2010: 40–43) identifies four main democratic problems due to network

1. Decision-making under traditional hierarchic representative democracy,

with bureaucratic institutions, majority rule and other constitutional
principles, is rather effective, as well as the following legally constricted
implementation phase. The decisions are not necessarily of high qual-
ity, but decisions are nonetheless taken. Under New Governance, deci-
sion-making is not as straightforward. Governance networks often lack
clear decision-rules, and the norm is often bargaining to gain consen-
sus. The end result is consequently indefinite.
2. Participation is one of the critical issues of representative democracy
today. The evidence of declining public involvement is abundant, at the
same time as governance scholars criticise the ability of representative
democracy to translate public wishes into action. Governance networks
are expected to involve a larger range and amount of actors, not limiting
this involvement to elections but achieving more continuous participa-
tion. Although inclusiveness is a problem for representative democracy,
the ability to include marginalised groups with minimal organisational
skills is also a difficulty for governance networks.
3. Coordination has always been a difficult task for governments, but these
problems have been aggravated as a consequence of the two waves of
governance reforms. Of course, by having more or less autonomous
organisations positioned outside the public sector, a larger total amount
of involved organisations and senior managers are able to make their
own decisions, which only adds to increasing coordination difficulties.
4. Peters sees accountability as the major issue to overcome for gover-
nance networks. Under representative democracy, the link of account-
ability is secured through the elected politicians. Regarding governance
networks, scholars debate whether direct linkages to politicians are
important or whether accountability may be established in other ways.

These are the issues that perhaps the dominant proposal for legitimising
governance networks wants to address, namely the concept of metagovernance

(see e.g. Jessop 1997; Peters 2010; Meuleman 2008; Sörensen and Torfing
2007; Damgaard and Torfing 2011). Metagovernance builds on the under-
standing that there are a number of organisations and processes in public
governance with substantial autonomy, and these need to be coordinated and
somewhat controlled. Metagovernance is often referred to as the “democ-
racy of the affected” and as “self-governance of governance” (Damgaard
and Torfing 2011: 295), which implies a certain amount of liberty for the
participants in the networks, and accordingly metagovernance aims at being
more subtle than standard regulating tools (how this succeeds in practice is
discussed in chapter 6). Bob Jessop describes metagovernance in the follow-
ing manner (Jessop 1997: 575):

Political authorities (at national and other levels) are more involved in organ-
ising the self-organisation of partnerships, networks and governance regimes.
They provide the ground rules for governance; ensure the compatibility of
different governance mechanisms and regimes; deploy a relative monopoly
of organisational intelligence and information with which to shape cognitive
expectations; act as a ‘court of appeal’ for disputes arising within and over
governance; seek to re-balance power differentials by strengthening weaker
forces or systems in the interests of system integration and/or social cohe-
sion; try to modify the self-understanding of identities, strategic capacities
and interests of individual and collective actors in different strategic contexts
and hence alter their implications for preferred strategies and tactics; and
also assume political responsibility in the event of governance failure.

Through metagovernance, the control of the direction of the econ-

omy and the society is expected to be provided, while at the same time
preserving the efficiency gains of the decentralising government reforms
(Peters 2010: 48). In this understanding, metagovernance is a method for
establishing a line of control from the traditional system of government
to governance networks. While many governance theorists see metagov-
ernance as a tool for public administrators to gain control, Eva Sörensen
(2006), in particular, highlights the importance of politicians to access
this control and thereby re-establish the line of accountability to citizens.
However, metagovernance is the result of cooperation between a plurality
of actors, from public administrators and politicians to private actors and
professionals. Accordingly, Sörensen advocates for politicians to assume a
central position in metagovernance, directly participating in governance
networks while still being merely one of the participants (Sörensen 2006:

For the purpose of exercising metagovernance, a number of tools have

been presented. Damgaard and Torfing (2011: 295) distinguish between
hands-off tools, i.e. frame-setting and designing networks, making rules
of membership, setting up goals, institutional procedures, funding etc.,
and hands-on tools, such as expert advice and consultancy. Peters (2010:
44–48) offers five categories of tools in this respect:

1. Performance management is associated with NPM and implies setting

objectives for the delivery of services within the public sector. Regarding
metagovernance, performance management enables the governing
actor to determine goals and thereby the activity of the specific organ-
isation without controlling the type of actions conducted to reach this
2. Strategic management implies coordination amongst actors, but in a
manner where the general objectives of the society are set first, and the
disparate goals of individual organisations and processes are coordi-
nated in accordance with the goals of the society. Peters sees strategic
management as metagovernance, since central values and goals are set,
but the means of achieving these goals are unspecified.
3. Controlling the budget through contracting, allocating personnel and
control over secondary legislation are all seen as effective means of achiev-
ing control.
4. The bureaucratic state implies governing through the use of law and
formal authority. In international governance, most notably the
European Union (EU), soft laws have been developed to achieve con-
trol when such kinds of tools are not applicable. These laws consist of
softer instruments such as negotiations and objectives, i.e. The Open
Method of Coordination of the EU.
5. All of the above instruments are backbone solutions of administrators,
aiming at formal and structural solutions. However, Peters sees trust
and values as potentially the cheapest and most effective tool for meta-
governance. The notion is to steer the development of common politi-
cal and administrative values in order to control the multitude of
organisations and processes, a concept which may be interpreted as a
method for shaping the environment of action for the actors in the
system of governance. These values must represent the importance of
public interest and be extended to the structures providing public ser-
vices. The critical point of this approach is if the governing coalition for
some reason collapses.

2.1.6 Summary: Beyond New Governance

What we have witnessed during the last three decades is first, the emer-
gence of governance networks driven by New Public Management reforms
aiming at reducing the “rowing” activities of the state, second, the iden-
tification of democratic deficiencies in the emerging network society and
the suggestion of a variety of solutions. Pierre (2000: 3) identifies two
types of responses, namely (1) the state-centric perspective, which basi-
cally implies maintaining the state-centric concept and adding new rules,
and (2) the society-centred perspective, where the state-centric concept
gives way to completely new patterns of rule. Pierre concludes that as most
governmental systems are oriented towards the rule of law and regula-
tion, a condition is thus created where state-centrism is maintained but
challenged as a result of the growing powers of networks (2000: 243).
In this context, metagovernance may be described as a method for the
liberal democratic government to gain control over the post-liberal reality
involving governance networks. Thus, metagovernance is more of a state-
centric response, while more radical post-liberal democratic concepts aim
at creating more autonomous and local decision-making, in other words,
closer to changing the game completely.
Bevir (2010: 18) views the rise of governance as being closely linked
to “new forms of knowledge and expertise”. Accordingly, the two waves
of New Governance reforms have followed two types of expertise. The
first wave was guided by economic rationality, which implied democratic
decision-making stepping back for the sake of independent institutions,
such as courts, central banks etc. The second wave of reforms was led
by institutionalism and advocated horizontal accountability and inclusion
based on partnerships and networks, including also the private and volun-
tary sectors (Bevir 2010: 256). Along with the third public management
model in the modernist state, i.e. the Weberian bureaucratic state, all these
models are expertise-based; in other words, dominated by a top-down way
of functioning with experts or authorities applying rational solutions when
deemed appropriate. Bevir sees an ultimate democratic failure in all three
systems, specifically in the top-down way of functioning, with experts giv-
ing rational and—almost by definition—general verdicts disregarding local
specificities. In contemporary social science, we see a rising importance of
the notion of learning in concepts such as policy learning, transnational
learning and social learning, each giving room for local knowledge and

Policy learning responds to apparent deficiencies of the governance

system, with both extensive and rigid elements such as audits and regula-
tory frameworks (see Room 2005). Policy learning comprehends policy
development as an incremental process, where new ideas and situations
are evaluated against past experiences. Thus, the importance of local skills
and knowledge is of importance (Bevir 2010: 192–193). A closely related
concept is transnational learning, which refers to learning between locali-
ties in the different contexts of different countries (see Mariussen and
Virkkala 2013); the concept implies a mixing of tacit and codified knowl-
edge adapted to the specificities of the localities in question. This is done
through a four-step process, initially introduced by Nonaka and Takeuchi
(1995), named SECI (Socialisation, Externalisation, Internalisation,
Combination). First, the process involves the introduction of experi-
ences from a different country. Second, an interpretation is made of these
models to the context of local specificities and tacit knowledge. Third, an
internalisation of the new ideas takes place. Fourth, the combination of
new and local knowledge is implemented into new models. Yet another
related concept is social learning, which refers to theorists who see human
behaviour as fundamentally unpredictable. Consequently, technocracy
does not amount to efficient policies. With social learning, citizens receive
policy ideas; they are able to point out problematic issues, build trust and
mutually set an agenda through participation and dialogue (see Dryzek
2000). The concepts of learning are in opposition to general expert ver-
dicts and benchmarking activities and instead advocate adaption to local
circumstances, and accordingly, the empowerment of local resources.
To summarise, there are a number of post-liberal suggestions as to
which manner the system of governance needs to be developed in order
to correspond to the post-liberal reality we face. A common theme with
all of these suggestions is that they advocate room for local actors, vis-à-
vis the state, to manoeuvre; i.e. the housing of governance networks and
processes of learning as described above. There are, however, differences
in the theories as to how far nation-state hegemony should be abandoned.
Metagovernance maintains the state-centric system to a larger degree by
offering the government steering possibilities, while other post-liberal
theories see stakeholder involvement, publicity and public debate as suf-
ficiently legitimising procedures. Of course, metagovernance may also be
exercised at different levels, by local, regional, national or international
authorities. Activities of learning may be regarded as legitimising processes
within the metagovernance concept, but above all, they may be regarded

as genuine bottom-up processes, pursuing the circumstances of locali-

ties, of the environment, of the structure of society and of citizen prefer-
ences. Thus, if we go beyond new governance by reaching for even more
advanced bottom-up processes, the radical post-liberal suggestions are on
par with metagovernance. Accordingly, selecting one of these responses
over the other is more of a political than an academic issue. This is a point
I will return to after discussing the economic aspect of society.


We have been looking at megatrends in society during the last century and
the implications these have brought about for the act of governing, or spe-
cifically, the democratic or legitimate aspect of governing. Generally, we
see a shift from centrism to pluricentrism, where localities play an increas-
ingly influential part. Whilst this shift implies challenges for the legitimacy
of the governing system, it has also certainly been of significance for the
economic aspect of human life. In this field we see a shift from Fordism to
post-Fordism, from the welfare state to the Schumpeterian Workfare state
and from the industrial paradigm to the knowledge paradigm, changes
which are quite expectedly in parallel with the direction to pluricentrism
and postmodernism explained earlier. First, we will take a look at the eco-
nomic cycles during this time period.

2.2.1 Kondriatev Waves

In their book As Time Goes By: From the Industrial Revolutions to the infor-
mation Revolution, Freeman and Louca (2001) describe economic devel-
opment in capitalist countries as long waves. The most common instance
of such waves is Kondriatev waves, suggested by Nikolai Kondriatev (see
e.g. Kondriatev 1926) and later emphasised by Joseph Schumpeter (1939).
Kondriatev saw economic development as cycles of approximately 50
years, with the first half of the cycle constituting upswing and the second
half downswing and crisis adjustment. Accordingly, we have witnessed five
Kondriatev waves during the last two centuries (see Table 2.2), primarily
based on technological development and innovations.
There are of course other classifications of economic cycles, one being
the combination of the Kondriatev waves into three industrial revolu-
tions seen in Table 2.2, and other constituting shorter business cycles
(e.g. Kitchin cycles, Juglar cycles) based on pure econometrics. Instead

of using simplistic measurements of GDP, industrial production etc. as

in the case of shorter business cycles, long waves are based on structural
and qualitative changes in the economy. Freeman and Louca (2001: 123)
conclude that economic development is dependent on five separate sub-
systems of society, namely science, technology, economy, politics and
general culture, and with the environment constituting a sixth decisive
element wherein the first five are embedded. Although developing sepa-
rately, favourable economic development is believed to be dependent on
the congruence and interaction between these systems. For instance, sci-
ence and technology advance separately, since tools such as the hammer,
the plough or the steam engine have been developed independently of
science, but yet, the knowledge of the laws of physics is obviously funda-
mental for innovations of that kind, and accordingly, science may boost
technological development by introducing entirely novel fields of technol-
ogy (computers and biotechnology are recent examples) (Freeman and
Louca 2001: 123–124). In a similar manner, the exceptionally early ease-
ment of serfdom and its influence on the appearance of industrialism in
Great Britain is an immense historical example of the effect and interaction
of the political system, technology and science. Looking at the economic
system, the behaviour of banks and firms, the accumulation of capital,
profits etc. are of course decisive factors for economic development in
capitalist countries. When considering the impact of literacy and general
education, cultural changes are also undeniably decisive for economic
development, as well as attitudes towards work, consumption, usury and
interest rates. Lastly, the environment, the occurrence of natural resources
and their depletion, is of course also fundamental (Freeman and Louca
2001: 125–129).
Social scholars generally agree that technology development and inno-
vations are the central sources of transformations of the economic system
(Freeman and Louca 2001: 139). The origin of long waves is consequently
mainly due to the irregularity of the pace of technology development.
In most cases, the process of scientific and technological development is
incremental, but at certain points turns explosive, when so-called clus-
ters of innovations cause technological revolutions and consequently the
appearance of a new techno-economic paradigm. When these clusters of
innovations appear, scientific discoveries have often given rise to entirely
new families of products. Other driving forces might be the discovery of
new energy sources (i.e. oil, electricity) or materials (i.e. plastics). As the
waves are so long, innovations of this kind are pervasive to such a degree

Table 2.2 The five Kondriatev waves. Alteration of Freeman and Louca (2001: 141)
Technological Leading branches of Managerial and Approx.
revolutions economy organisational changes time period

First Water-powered Cotton spinning, Factory system 1780–1848

industrial mechanisation of Iron products Entrepreneurs
revolution industry Water wheels Partnerships
Steam-powered Railways Joint stock companies 1848–1895
mechanisation of Steam engines Subcontracting to
industry and Machine tools craft workers
transport Alkali industry
Second Electrification of Electrical equipment Specialised 1895–1940
industrial industry, transport Heavy engineering management systems
revolution and the home Heavy chemicals Taylorism
Steel products Giant firms
Motorisation of Diesel engines Mass production and 1941–1973
transport, civil Automobiles, trucks, consumption
economy and war tractors, tanks, aircraft Fordism
Third Computerisation Computers Internal, local and 1973–
industrial of entire economy Software global networks
revolution Telecommunication

that they fundamentally change the system of technology, social organisa-

tion and society completely. However, it is worth noting that a technologi-
cal novelty cannot immediately have an impact on economic development,
as new infrastructure, new services and new management systems will be
needed to be able to incorporate it. For instance, the electrification that
initiated the second industrial revolution (the third Kondriatev wave)
needed the construction of the power grid, the education of electricians,
an attitude of acceptance from citizens and legislative and political sup-
port for the expansion of the technology, before being completely utilised
(Freeman and Louca 2001: 145). In this manner, clusters of innovation
initiating a long wave are of such a kind that they impact every aspect of
human life. Although the longevity of a technology system is of course far
greater than the 50 years of a Kondriatev wave (consider e.g. electricity,
railways), since exponential growth cannot be sustained forever, a phase
of stagnation occurs before a new techno-economic paradigm eventually
becomes dominant.

The usage of the term “wave” rather than “period” or “stage” implies
recurring characteristics in every wave. Carlota Perez (1983) has described
four phases of a long wave:

1. One factor becomes cheap or easily accessible (e.g. coal, iron, microchip).
2. This factor stimulates the development of new industries (e.g. textiles,
cars, computers).
3. New infrastructure gives rise to new organisational innovations (e.g.
factory-based manufacturing, computer systems).
4. The new techno-economic paradigm eventually leads to a downswing,
which Perez implies is caused by turbulence, triggered by a conflict
between old and new industries, due to vested interests. The turbu-
lence is primarily a consequence of a mismatch between the old institu-
tional framework and the new paradigm displayed in structural
unemployment and demands for new industrial standards, education,
trade protection or free-trade, safety regulations, environmental pro-
tection etc.

Kondriatev waves do not impact all countries similarly or at the same

time. Still, global consequences are visible shifts of techno-economic para-
digms. In the current paradigm, information technology has enabled a
dramatic rise in multinational flows of transactions, interactions and
knowledge. Kondriatev waves constitute the basis for the shifts from
Fordism to post-Fordism and from the industrial to the knowledge para-
digm discussed below.
Nevertheless, it is important to keep in mind that although technologi-
cal developments act as incentives for organisational restructurings, they
are still fundamentally caused by people acting differently.

2.2.2 Fordism and Post-Fordism

Fordist capitalism and the Fordist state reigned during the period of the
industrial society after the Second World War, and accordingly, Fordism is
bound together with the bureaucratic-corporative Keynesian welfare state.
The era of Fordism in capitalist countries is characterised by a high rate
of growth, mass consumption and production and the expansion of wage
labour (in the place of agriculture and craft production). Fordism saw
the rise of trade union organisations, standardisation of labour relations
in the form of labour unions and a system for bureaucratic care in the

form of the welfare state (Hirsch 1991: 67–68). The specific economic
aim of the state was full employment, and this was mainly achieved by
equalisation policies. Accordingly, regions under Fordism were com-
prehended as extensions of the state, and regional policy therefore also
implied equalisation, that is the location (or relocation) of industry with
accompanying expansion of infrastructure as a method of distributing
employment and avoiding inflation in overheated regions (Jessop 1993:
23). Under the Keynesian welfare system, in a closed national economy,
wage was perceived as equal to demand, and consequently, the demand-
side management of the Keynesian system legitimised, for example, the
collective bargaining of labour unions (Jessop 1993: 20). The Keynesian
state smoothed out economic fluctuations and thereby secured stable
growth, which encouraged firms to invest (Jessop 1991: 86). Class rela-
tions inside states also changed dramatically and offered workers a con-
tinuous improvement of living standards, which eventually resulted in a
dramatic enlargement of the middle class and the end of party voting, as
discussed above.
The Fordist-Keynesian states arose at the time of the post-war boom,
with beliefs of unlimited economic growth and exploitability of natural
resources and a strong emphasis on the powers of science and tech-
nology (Hirsch 1991: 69). The crisis of Fordism in the 1970s and
onwards was first and foremost a consequence of insufficient growth
of productivity in relation to wages. When stagflation occurred, efforts
were made to limit wages, raise taxes and cut spending by reducing
the bureaucratic machinery, which gradually weakened the support
for the Keynesian welfare state. Halkier (2012: 1771) identifies two
explanations for this transition: first, there is the semi-functional per-
spective view, whereby there is a disability of redistribution to cope
with regional inequality at the time of flexible specialisation, to which
bottom-up processes through regional learning and experimentation
suited all the better. Second, the political perspective view, whereby the
influence of neoliberalism and its reduction of public spending (the first
wave of New Governance) and the rise of bottom-up development ini-
tiatives making use of new policy instruments (the second wave of New
Governance) are seen. However, the origin of the shift is undoubtedly
complex, and Bob Jessop has accordingly identified a number of char-
acteristics of the shift to post-Fordism, which can be summarised in five
points (1993: 11–23).

1. Growing internationalisation forces states to realise that the national

economies are not closed and that the growth dynamic is not
concentrated to the state. The nation is not self-evidently the best place
for growth and innovation—instead, the management of the economy
becomes a matter of supporting insertion into the global economy. The
role of the state is concentrated to supporting the internationalisation
of companies, furthering conditions for investments and innovation
and managing the process of internationalisation by, for example, get-
ting involved in redefining international economic frameworks. In
other words, internationalisation allows firms to escape national con-
trol. At the same time, national economic policy in the form of the
Keynesian welfare system stopped working, since the demand-side
efforts of Keynesianism are misdirected in an open national economy,
as the direct link between wage and demand disappears. Instead, in the
post-Fordist society, wage is regarded as a production cost, and conse-
quently supply-side interventions are preferred. Similarly, the role of
money changes when capital is allowed to flow across borders without
control of the state. The national currency is increasingly vulnerable
when it is directly dependent on the competitiveness of the nation,
which also implies preference to supply-side management. In accor-
dance, we have witnessed the creation of a common European currency
during one of the first decades of post-Fordism.

2. New technologies gave rise to completely new knowledge and capital

intensive industrial sectors that demanded an increased cooperation
between firms, science, education, public and private laboratories, ven-
ture capital, public financing institutions etc. In order to keep up with
international competition, when production was increasingly over-
taken by low-wage states, capitalist economies needed to improve their
technological knowledge and specialise in certain growth sectors in
order to retain growth. Since national economies are increasingly open
to the forces of globalisation, post-Fordist states cannot maintain
declining sectors unchanged and instead must support so-called sunrise
sectors and restructure declining “sunset sectors”. The state and/or
regional authorities receive a key role in promoting the innovative
capacity in order to enable access to innovations and new technologies
for as many firms as possible. In post-Fordism, national and regional
systems of innovation are at the core of economic development.

3. A techno-economic paradigm shift implies a transition from mass pro-

duction, mass consumption, big science and scale economies to flexible
production, systems of innovation, scope economies and sudden alter-
ations in consumer habits. This development demands a capacity for
rapid shifts between different innovative products and processes. Under
Fordism, production and products were standardised, under post-
Fordism, production must be flexible. Policymakers must increasingly
focus on the competitiveness of companies, namely supply-side man-
agement, and accordingly, welfare becomes subordinate to the flexibil-
ity of production.

4. A shift in the regional forms of global and national economies refers to

the growing importance of “world regions”, namely the supra-national
of North America, Europe and Asia, and concurrently, subnational
economies. The nation-state, thereby, misses its absolute control over
economic development both to subnational regions and transnational
bodies, which has a substantial effect on hierarchies, representation and
social platforms. However, as we shall see in a later chapter of this
study, the state retains its role as the central executive authority, and is
thus able to influence the behaviour of subnational bodies. When look-
ing at the influence of transnational bodies, the national economies of
the EU are perhaps the most illustrating example. The objective of the
EU to become the most competitive economy in the world has boosted
an extensive effort to develop regional R&D-structures, and has also
allowed the rise of “Eurofirms” and intensive investments in high-
growth sectors. EU policy is the principal stimulator of joint efforts
between firms, laboratories and universities around Europe. At the
same time, subnational units have become “nodes” in the global eco-
nomic network. Similarly, post-Fordism appoints regions as creators of
economic regeneration and competitiveness. The emphasis on subna-
tional units is based on a belief in the state’s inability to differentiate
and be sensitive to regional conditions and difficulties. Thus, many of
the activities previously found on the national level are increasingly
dealt with in regions, such as labour-market policies, education, tech-
nology transfer, innovation systems etc.

5. Jessop (1993: 17–18) has linked the transition from Fordism to post-
Fordism with the shift from the Keynesian welfare state (KWS) to the
Schumpeterian workfare state (SWS). While the two main features of

KWS are to (1) promote full employment through demand-side man-

agement and (2) generalisation of mass consumption through welfare
rights, SWS wants to (1) promote innovation and structural competi-
tiveness in economic policy and (2) promote the flexibility and com-
petitiveness in social policy. Jessop explains the combination of
“Schumpeter” and “workfare” with the Schumpeterian emphasis on
innovation as central for capitalist growth and the reorientation of
social policy away from redistribution towards cost-saving production
as described in the concept of workfare. Thus, Jessop sees a develop-
ment signified by the central role of innovation-driven competitiveness
and cost-reduced production as central for contemporary capitalist
states. The economic discourse has changed from being focused on
“productivity” and “planning” to emphasising “entrepreneurship” and
“flexibility”. While KWS supports full employment and social rights to
the people, SWS promotes structural competitiveness and support for
companies rather than the needs of individuals.

2.2.3 From Industrial Economy to Knowledge Economy

Along the lines of the shift from Fordism to post-Fordism, since the 1970s
we have witnessed a transition from an economy based on industry and
manufacturing to one based on knowledge and innovations. The domi-
nant approach to economic development in a knowledge economy is the
importance of local assets and endogenous growth, and accordingly, there
is strong support for regions, subnational development bodies and proxim-
ity in contemporary economic sciences (consider concepts such as clusters
(Porter 1990), industrial districts (Becattini 1990; Brusco 1990), innova-
tive milieux (Camagni 1991), learning regions (Asheim 1996), localised
learning (Malmberg and Maskell 2006)). In essence, this implies a focus
on relevant institutions and knowledge bases in regions, as well as on the
examination and combination of different kinds of knowledge in order
to facilitate innovations through cross-fertilisation (Tödtling et al. 2013).
Hence, the knowledge economy corresponds to a situation where the use
of knowledge has become the cornerstone of production and where dif-
ferent kinds of knowledge are combined in innovative ways. Accordingly,
Powell and Snellman define knowledge economy as “production and ser-
vices based on knowledge-intensive activities that contribute to an acceler-
ated pace of technical and scientific advance, as well as rapid obsolescence”
(Powell and Snellman 2004: 199).

In a special issue of European Planning Studies, Halkier et al. (2012)

have demonstrated the extent to which the knowledge economy is existent
in contemporary public policy. The previous industrial paradigm in poli-
cymaking was dominated by central government programmes targeting
problem regions and supporting investments in productive capacity (new
and old firms). The knowledge impact of policies during this period con-
sisted of an increase in synthetic knowledge (see description of knowledge
bases below) through the allocation (or reallocation) of factories to periph-
eral areas, in other words, the geographical diffusion of existing knowledge
(Halkier 2012: 1769–1770). The knowledge paradigm in public policy is
distinguishable from the 1980s onwards, where several tiers of govern-
ment became involved in addition to the national state, as well as actors
representing all society sectors. The knowledge paradigm also saw the end
of equalisation policies, which were replaced by region-specific measures,
supporting indigenous firms by setting up a regional infrastructure for
technological and organisational support in the form of advisory services,
venture capital and networks of firms in the form of e.g. science parks and
creative clusters (Halkier 2012: 1770). Public policy did not merely sup-
port firms, but also focused on promoting innovation systems by continu-
ous networking between policy bodies and firms, systems and individuals.
Aided by the results of an extensive investigation of 181 Regional
Development Agencies (RDA) in 22 EU member countries in 2006/2007,
Halkier (2012) is able to present a comprehensive picture of public policy
in contemporary Europe. In their policies, almost all of the studied RDAs
aim at improving the level of knowledge and the relation between regional
actors, which is evident in both central and peripheral regions. As much
as 99 % of the policies examined concerned knowledge exploitation, and
almost half of the policies had a direct impact on the use of knowledge for
economic purposes (Halkier 2012: 1774, 1778). Unlike previous policy
instruments, which were primarily financial, these consisted of informa-
tion and organisational structures. Although around 80 % of the analysed
policies aimed at synthetic knowledge (manufacturing and business skills),
Halkier specifically emphasises the significant position of symbolic knowl-
edge (communication, attraction of inward investments, advice on mar-
kets and marketing). Moreover, in the study presented by Halkier (2012:
1780), further case studies revealed the importance of an even wider range
of knowledge impacts on innovative economic processes, which suggests
that synergies between different policy actors are beneficial and should
be promoted. Based on the evidence of the mentioned investigation,

Halkier is able to state the fact that multilevel governance of bottom-up

policy is widely spread in Europe, with networked RDAs sponsored by
several levels of government. While innovative economic development is
increasingly dependent on a large number of actors, coordinating activi-
ties are essential. RDAs in Europe focus heavily on knowledge, demand-
ing detailed knowledge of firms and regional economic activity. Although
policy is often directed to systems of innovation and the training of indi-
viduals, the objective is to impact the level of knowledge at firms (Halkier
2012: 1779).
The transition from industry to knowledge economy is not only a mat-
ter of policies or adaptations to human preferences—it is also driven by a
growing sophistication of products. This complexity of products, along
with benefits for innovation, is the incentive for exploring and combin-
ing different knowledge bases; a matter discussed further in the following

2.2.4 The Importance of Knowledge

Perhaps the most significant characteristic of the knowledge paradigm
is the ever-growing importance of all kinds of knowledge; analytical and
symbolic as well as knowledge that has not previously been regarded as
directly connected to financial benefits (Halkier 2012: 1771). Innovation
processes increasingly demand diversified knowledge bases and combina-
tions of different types of knowledge. Previous research has displayed that
the relevant knowledge base for many industries is not constricted to one
industry sector, but is divided across a whole range of industry branches
and technologies (Asheim et  al. 2011a: 14). In public policymaking,
Halkier et al. (2012: 1764) have acknowledged the fact that knowledge
is not sector-specific as during the industrial, Fordist paradigm, but com-
prises combinations of knowledge. This development implies that even
large metropolitan regions find it difficult to host the diversity of knowl-
edge bases required, and as a result, firms experience a need to connect to
external knowledge networks and open innovation networks. At the same
time, a demand for intensified internal networking is evident, since knowl-
edge flows are increasingly taking place between different types of knowl-
edge bases and levels of R&D intensity. Asheim et al. (2011a: 15) offer the
example of the input from biotech firms to the production of functional
food, a case which the authors believe depicts that “the distributed knowl-
edge networks transcend industries, sectors and common taxonomies of
high tech or low tech”.

In the same work, Asheim et  al. (2011a: 9–12) develop a categorisa-
tion of knowledge into analytical, synthetic and symbolic, calling it the dif-
ferentiated knowledge base. The authors’ intention of this recategorisation
of knowledge is the aforementioned complexity of innovation processes,
where the high-tech/low-tech dichotomy counteracts the combination of
different types of knowledge witnessed in current innovation processes, at
the same time as the labelling of knowledge as codified or tacit is viewed as
too simplistic (Asheim et al. 2011b: 1135; see also Johnson et al. 2002).
The differentiated knowledge base suggests that tacit and codified knowl-
edge always co-exists in different combinations, while it recognises the
potential for innovation in all types of knowledge. Accordingly, the cat-
egorisation of knowledge as more or less advanced or sophisticated, and
consequently, more or less important for innovation, becomes obsolete
(Asheim et al. 2011a: 13). The three knowledge base types described below
should be viewed as ideal types, whereas innovation processes in practice
often include combinations of these bases (Asheim et al. 2011a: 9–12):

1. An analytical knowledge base is where scientific knowledge is based on

formal models, codification and basic science. Natural sciences, such as
biotechnology and nanotechnology, are examples where this knowl-
edge base is strong. Innovations are science-driven and often lead to
new patents, while knowledge applications often materialise in entirely
new products or processes. Consequently, the innovations are more
radical than in the other knowledge types and more often lead to new
or spin-off firms. University–industry links are stronger here than in
the other knowledge bases and the workforce more often needs univer-
sity or research experience.
2. A synthetic knowledge base is characterised by innovation processes
where the application or unique combination of existing knowledge
takes place. Synthetic knowledge is accordingly more focused on
applied research than basic research and innovations are often problem-
solving and user- and market-driven. Since knowledge frequently origi-
nates from the work place, tacit knowledge is more important and
innovations are consequently more incremental than in the analytical
knowledge base. There are university–industry links, but these are
concentrated to applied R&D, and the workforce is know-how ori-
ented and often provided by polytechnics or on-the-job training.
3. A symbolic knowledge base consists of cultural production, such as media,
advertising, brands and fashion. The creation of symbols, meaning and

desire and the aesthetic value of products through the ability of inter-
pretation of habits and norms in everyday culture are at the centre of
this knowledge base. Accordingly, the knowledge base is highly
context-specific, tacit and very loosely tied to formal qualifications and
university training.

A related distinction is derived from two innovation modes; Science,

Technology and Innovation (STI) and Doing, Using, Interacting (DUI)
(Jensen et  al. 2007), where the first is a scientific approach to innova-
tion, leaning on codified and formalised knowledge, while the second is
experience-based, leaning on informal and tacit knowledge. Tödtling et al.
(2013: 161) note that there is general acceptance among scholars that
the contemporary process of innovation consists of an open and inter-
active process, where tacit and codified knowledge are combined, using
both the STI and DUI modes of innovation. High-tech, as well as low-
tech, firms have been found to extract knowledge from a large range of
sources, making use of all three kinds of knowledge bases. As we also shall
see when learning regions are discussed later on, Tödtling et al. (2013:
162) identify a recognition among scholars of the impact on innovation
processes of different kinds of innovation sources (customers, suppliers,
competitors, science) and also the specific geography of the location, i.e.
regional, national and/or global circumstances. Malmberg and Maskell
(2006: 3–4) see advantages of increased interactions within localities, but
at the same time raise a note of caution for lock-in occurrences in cluster-
dominated localities, when the institutions and the knowledge base are
aligned and lock out other options for the local economy. The concepts of
related and unrelated variety are useful for counteracting lock-in, where
the first implies cross-fertilisation between related but not similar indus-
trial branches, while the second expresses the need for a locality to house
unrelated industry branches to avoid “putting all the eggs in one basket”
(Frenken et al. 2007). The concept of related variety has received a lot of
attention among scholars during recent years, and is also a cornerstone of
the recent Smart Specialisation Strategy of the EU. The cluster literature
(see Porter 1998) suggests that knowledge and the process of innovation
are specialised and industry-specific, and consequently relevant knowledge
and ideas solely come from the interaction with partners along the value
chain rather than from other branches. Evidently, suppliers (Malmberg
and Maskell 2006: 5–6) and customers (Callahan and Lasry 2004) are
highly important sources of feedback, but the concept of related variety

highlights the possibility for the emergence of new ideas, especially radical
ones, when related but not similar industrial branches meet, in contrast to
the benefits of specialisation advocated in the cluster literature (see more
on related variety in the chapter 8 of this study).
What we have witnessed during the last decades is the increasing emer-
gence of more complex products and services, drawing from a broad range
of knowledge bases and industrial branches. Powell and Snellman (2004:
201) offer the example of the car industry, where the production of a car
has been transformed from pure metal fabrication to involving sophisti-
cated computer technology and knowledge about emissions, safety, enter-
tainment and performance. Another example is the ecommerce company, which obtains knowledge in order to suggest products
matching the customer’s taste, at the same time managing a factory-era
warehousing system. The same characteristics are visible everywhere, often
displaying the reuse and rebranding of proven products and services, using
symbolic knowledge to adjust the product or service to the needs and
wants of the modern consumer. Starbucks is an example of this, mak-
ing use of a concept that has been present since the sixteenth century
(cafés), and constructing an entirely new service (an effective and repli-
cable quick-service platform) that is now an integral part of the American
society. Twitter is another example, making use of knowledge about con-
temporary culture to combine pre-existing technologies like SMS, email
and blogging and transforming them to an instant micro-blog which has
changed the way both people and the media communicate.
Still, perhaps the most striking example of the combination of tech-
nological and cultural knowledge during recent years is the iPhone. The
mobile phone, in its classic form in the 1980s, was essentially an adapta-
tion of the telephone, which in turn was an adaption of radio technol-
ogy, the telegraph etc. During the 1990s, a second generation of mobile
phones arrived, much smaller, cheaper and including a range of new fea-
tures, involving fashion, entertainment and media, which consequently
became an important part of the everyday life of consumers (Goggin
2009: 231). In this perspective, the iPhone is merely an adaptation of
the cellular phone, a step in the evolution of mobile phones. The iPhone
does however constitute a case where the use of culture in technology
development has reached a new level. The iPhone essentially intervenes
in several genres of contemporary culture, most notably the mobile
phone culture, the internet culture, the broader digital culture, the media
culture and even the human culture in general (Goggin 2009: 231).

Laugesen and Yuan (2010) concluded that the success of the iPhone con-
sisted of consumer (demographics, user preferences and culture), corpo-
rate (business model, technology, marketing and services providers) and
environmental (regulatory, infrastructure) factors. Most important for
this line of argument, the iPhone succeeded in targeting “mainstream
America” by using knowledge of user preferences, demographics and cul-
ture. Apple had experience of the demographics of the users of the iPod
and iTunes and used this when making the iPhone.
What Apple understood was, contrary to the competitors, the benefit
of making a smart mobile phone for personal rather than business use,
creating applications that have appeal to a wide variety of demographics,
while at the same time finding and exploiting cultural niches. Apple noted
the preferences of users wanting “uncomplicated” devices with “reach and
richness of content” and a “functional internet experience”, and accord-
ingly responded to those needs with every new generation of the iPhone
(Laugesen and Yuan 2010: 93). For example, Apple used the knowledge
of user preferences to construct “a simple array of buttons” that simpli-
fied the multitude of menus, icons etc. present in other devices. Apple
also made use of its knowledge of personal computers to make the Safari
browser to create a usable internet experience on a mobile device. Perhaps
most significantly, Apple realised the growing importance of software
rather than hardware, and consequently launched its App store, which
presented the consumer with a diversity of entertainment and business
applications (Laugesen and Yuan 2010: 94). Additionally, Apple has com-
bined its product with a very successful marketing and branding strategy,
giving the launch of the iPhone a revolutionary status rather than the
evolution of the mobile phone that it actually was. Apple branded the
launch in 2007 “the biggest launch since Apollo”, even staging long lines
of customers around the world to receive the maximum amount of atten-
tion (Goggin 2009: 236). The marketing and branding made the iPhone
a status symbol for users and, together with other Apple products, cre-
ated an “extremely loyal customer base” (Laugesen and Yuan 2010: 94).
In conclusion, in iPhone we see the use of a range of different kinds of
knowledge, with technology being merely one of many parts. Cultural
knowledge, the knowledge of cultural production in all forms and the
manner in which consumers perceive and interpret it, is definitely a central
type of knowledge for the construction of the iPhone.
Paradoxically, the shift from demand-side to supply-side investments
that followed the transition from the Fordist to the post-Fordist economy

has given rise to a seemingly ever more important culture of consumption.

For instance, we see companies using strategies to create a need among
consumers to obtain the latest version of a particular product as decisive
for growth. As seen with the iPhone case, knowledge of youth culture,
or “hipster” culture, is at the core of product and services development.
This is perhaps best illustrated through the rise and fall of the mobile
phone giant Nokia, whose products were technically excellent, but in
contrast to Apple, Nokia failed at achieving the cultural element in its
products. Nokia was excellent at developing innovations, for instance con-
structing an internet tablet already in 2001, but failed at bringing it to the
market, reaching consumers and responding to and influencing youth cul-
ture (see Cord 2014). What we witness here is a “culturification” of prod-
ucts, where services and products are constructed by identifying demands
among youth culture, and these services later reach other social categories.
Digital service is the most notable example here, where companies such
as Facebook, WhatsApp and the gaming industry have a turnover of bil-
lions, and compared to traditional manufacturing industry, housing very
few employees.

2.2.5 Learning Regions

As we have seen, and as numerous regional scholars, economic geog-
raphers, and policymakers have concluded, innovation and knowledge-
transforming capabilities have turned out to be the focal point of economic
development in the post-Fordist era. In accordance with the importance
of knowledge combinations described above, Halkier et al. have identified
“white spaces” between different sectors as especially promising areas for
innovative combinatorial projects (Halkier et al. 2012: 1764). This typi-
fies the increasing need for cooperation and networking between firms,
universities, R&D units and public coordinating organisations.
The transition from government to governance described earlier in this
study is, of course, extremely relevant to the economic field as for politics
and democracy. Actually, the transition is partly explained by changes in
economic strategy, for instance by the shift of emphasis from National
Innovation Systems (NIS) to Regional Innovation Systems (RIS) witnessed
during the last two decades (see e.g. Tödtling et  al. 2013). Bob Jessop
recognises a shift from government to governance also at the regional
level, describing it as the reorganisation of local states, when new forms
of partnerships form in order to direct and encourage the development of

local resources: “local unions, local chambers of commerce, local venture

capital, local education bodies, local research centres and local states may
enter into arrangements to generate the local economy” (Jessop 1994:
272). These kinds of regional development coalitions are precisely what
form the basis for what has popularly been described as the learning region
(Asheim 2001). Over the years, the knowledge economy concept has been
used interchangeably with learning economy (see e.g. Lundvall 1996),
and accordingly, the concept of learning region refers to the knowledge
economy paradigm and the use of knowledge. The reason for the emer-
gence of more active regions has already been dealt with above, but can
in economic terms be described as a shift in international trade relations,
from advantages on the basis of inexpensive production factors (labour,
raw material etc.) to advantages relying on knowledge and innovations
making more productive and efficient use of inputs (Asheim 2001: 2). The
concept of learning has endured criticism over the years, especially regard-
ing the fact that firms have always been learning (Hudson 1999), but
earlier, innovation was of significance mainly for interfirm competition,
while the concept of learning regions refers to a larger qualitative shift of
the development of capitalist economies (Asheim 2001: 2).
Learning region was coined as a concept in the 1990s for the purpose
of raising awareness about the importance of the locality. Asheim (2001: 3)
has gathered a number of definitions of this concept: according to Richard
Florida (1995: 527), learning regions are “collectors and repositories of
knowledge and ideas, and provide an underlying environment or infra-
structure which facilitates the flow of knowledge, ideas and learning”, while
Hassink (1998: 6) sees them as “regional development concepts in which the
main actors are strongly, but flexibly connected with each other and in which
both interregional and intraregional learning is emphasised”. The Swedish
EU Programme Office perceives learning regions as able to “initiate and
provide the basis for co-operation between enterprises in regions, local pub-
lic bodies, organisations and other interest groups” (National Institute for
Working Life 1997: 1). A closely related concept is localised learning, which
refers to the manner in which local conditions and spatial proximity are able
to support regional economic development (Malmberg and Maskell 2006).
Localised learning was originally a response to claims in the 1990s of the
“end of geography”, due to the advancement of communication technolo-
gies, in particular, but also to the improvement of transportation and the
erosion of trade barriers. These occurrences are, of course, undisputable, and
although several production factors have become ubiquitous due to globali-

sation, by constructing the concept of localised learning, theorists wanted to

point out the factors that resisted this “ubiquitification process” (Malmberg
and Maskell 2006: 3). These factors, it was concluded, consisted first of the
institutional setup and second of the knowledge base in respective locality. The
knowledge base consists of the knowledge inherent in firms, educational
organisations and different R&D organisations, and this knowledge base,
similarly to the institutions, develops over time. Institutions in this regard
are “humanly devised constraints that structure human interaction. They
are made up of formal constraints (e.g. rules, laws constitutions), informal
constraints (e.g. norms of behaviour, conventions, self-imposed codes and
conduct), and their enforcement characteristics. Together they define the
incentive structure of societies and specifically economies” (North 1994:
360). These institutions form over time as a consequence of political choices,
but also as a response and adaptation to the activity of firms.
Amin and Thrift investigated “the real prospects for self-governed
development paths in an era of global interdependency” (Amin and Thrift
1994: 1) and similarly arrived at a decisive importance of the institutional
structure. The authors developed the concept of institutional thickness,
which comprises

the presence of many institutions; inter-institutional interaction; a culture of

collective representation; identification with common industrial purpose; and
shared norms and values which serve to constitute the ‘social atmosphere’ of a
particular locality. Thus institutions were broadly conceived to include not only
formal organizations, but also more informal conventions, habits and routines
that are sustained over time and through space. Similarly ‘thickness’ is con-
ceived to stress the strong presence of both institutions and institutionalizing
processes, combining to constitute a framework of collective support for indi-
vidual agents. Implicit to the argument was also the tacit stress on the inclusive
nature of such collective support, reaching out to and involving the majority of
individuals and groupings in the local economy. (Amin and Thrift 1995: 104)

Thus, the specific characteristics of a region receive ever-growing

importance in the globalised world. Learning regions are able to pros-
per on the basis of endogenous growth, and in that way achieve positive
economic development without grabbing this opportunity from compet-
ing regions. According to these theories, every region, despite prerequi-
sites, is able to maintain and develop its economic structure. The AsPIRE
research project, described in Kahila et  al. (2006), compared successful
peripheral regions with unsuccessful central regions in 12 case regions in

6 European countries (Greece, Scotland, Spain, Ireland, Germany and

Finland). Based on their accessibility, the central regions would have been
expected to be more successful, and Kahila et  al. singled out the gov-
ernance system as the decisive factor for improving the success of the
peripheral regions. Kahila et al. also state that a contrast between the two
groups could be found “in terms of the willingness of the actors to co-
ordinate their activities, and to adapt generic programmes/measures to
local geographic constraints or opportunities” (Kahila et al. 2006: 51).
Connectedness thereby seems to matter. In this respect, Malmberg
and Maskell (2006: 5–8) divide regional economic interaction into
three categories: vertical, horizontal and social dimensions. The verti-
cal dimension has traditionally been dominant in empirical analyses and
implies the interactions firms maintain with supplier and customer firms,
as well as industry-academia links. The horizontal dimension corresponds
to firms acting as competitors rather than collaborators, and accordingly
involves observing and comparing activities (although the concept of co-
opetition suggests possibilities for cooperation also with competitors, see
e.g. Nalebuff and Brandenburger (1996)). The social dimension refers to
“neighbourhood effects”, which Malmberg and Maskell describe as “local
social interaction” and “conversion through conversation”. This involves
“the information and communication ecology created by numerous
face-to-face contacts”, “intended and unanticipated learning processes in
organised and accidental meetings”, and as a consequence of these activ-
ities, there are “lots of piquant and useful things going on simultane-
ously…. and therefore, lots of inspiration and information to receive for
the perceptive local actor” (Malmberg and Maskell 2006: 7).The local-
ised learning argument is consequently the strengthening effect of spatial
proximity on cognitive proximity, i.e. proximity bringing different actors
together by developing a common institutional, social and cultural set-
ting ((Malmberg and Maskell 2006: 9). A parallel concept to the social
dimension is the creative class concept of Richard Florida (2002). Florida
predicted the decline of the attraction of suburbs on behalf of urban cen-
tres, as a consequence of the creative class pursuing living environments
on the basis of the “people climate” a locality possess, in other words,
areas where inspiring things happen, people meet, interact and exchange
experience, in contrary to the low-density, auto-oriented suburban sprawl.
As we saw in the previous chapter, the co-development of the institutional
structure and the knowledge base easily increase specialisation with a risk
of lock-in, and therefore related variety is a reasonable strategy of develop-

ment for any region. However, given that knowledge spillover is better
facilitated in connected localities, this often entails incremental innova-
tions, and consequently, extra-local links are essential for the possibility of
non-incremental innovations. Malmberg and Maskell (2006: 10) refer to
these links as “pipelines” and regard them as more static than the interac-
tion and exchange going on inside localities. Since a potential extra-local
partner suitable to specific needs must be found, the level of information
exchange must be decided etc.
As Malmberg and Maskell suggest, a sustainable locality in the post-
Fordist globalised economy should be connected both inwards and out-
wards. This perception is also supported by the concepts of the Quadruple
Helix and the Mode 3 Knowledge Production System, which suggest com-
prehensive society inclusion and connectedness both within the locality
and to knowledge hubs around the world. By expanding the Triple Helix
concept for innovation systems to a Quadruple Helix, Carayannis and
Campbell add civil society and a “media-based and culture-based pub-
lic” as a helix in the innovation system (Carayannis and Campbell 2009:
206–207). The general idea of the Quadruple Helix is that civil society and
the public are users and appliers of knowledge and are thereby thought to
contribute with region-specific context and experiences. Accordingly, the
Quadruple Helix implies a broader understanding of developing innova-
tions, involving culture, arts, media, values and lifestyle. These factors, also
including the manner in which media construct public reality, are expected
to influence the creative environment in a specific region and, in turn, the
innovation system (Carayannis and Campbell 2012: 15). Carayannis and
Campbell combine the Quadruple Helix with the Mode 3 Knowledge
Production System (Carayannis and Campbell 2006), a concept which
basically implies a combination of the infusion of external knowledge and
an intense collaboration between research units, firms and public agen-
cies, where basic, applied and experimental research as well as analytical,
synthetic and symbolic knowledge are combined (for a more thorough
description of these concepts, see Article 4).

2.2.6 Summary
In summary, long economic waves, such as Kondriatev waves, reveal the
paradigmatic shifts science and knowledge give rise to, causing fundamental
alterations of the organisational factors of society. The shift that has been of
particular interest in this study is the third industrial revolution and the tran-

sition from Fordism to post-Fordism. In economic terms, Fordism focused

on big science and rather static mass production, while post-Fordism is
characterised by flexible production and continuous innovative develop-
ment. In the post-Fordist world, knowledge is the fundament of economic
development, and this circumstance emphasises the importance of local-
ity, social inclusion and connectedness, both inward and outward. Modern
innovation systems greatly rely on detailed knowledge of the region and
the firms, a fact that underlines the significance of a bottom-up approach to
regional development.
The case of the iPhone highlights the complexity of contemporary prod-
ucts and services (to a larger extent, the iPhone is actually marketed as a
service rather than a product), a fact that basically advocates for the neces-
sity of a differentiated local knowledge base with external connections,
and at the same time, the complexity illustrates the possibilities for the
innovations that such knowledge combinations constitute. Networking,
connections and influences of extra-regional actors are essential in order
to receive new notions, but these innovations must always be applied in
consideration of and interaction with local knowledge, experiences and
culture. Halkier et al. (2012: 1765) too conclude that policymaking must
be based on local circumstances rather than being copied from successful
regions. Here, we approach the concept of learning already assessed in the
paragraph of New Governance above. The benefit of interactions leading
to chance cross-fertilisations between industry branches is apparent in the
innovation literature, and at the same time, the impact of the specificities
of the localities is emphasised.
In a globalised economy, consumers and investors are expected to have
access to more choices and better deals, while independent regional produc-
ers are in a dominant position. Still, we have witnessed the continued and
ever-growing importance of “too big to fail” companies. Looking from a
bottom-up perspective, local and regional authorities may aim at attracting
external investments and establishments, an option which obviously is ben-
eficial for the local community in the event of success. However, when writ-
ing about Finnish conditions, the rise and fall of Nokia is of course close at
hand when discussing “too big to fail” companies. Nokia was supreme in
the mobile phone industry, even being one of the strongest brands in the
world for several years. Still, in the rapidly shifting post-Fordist economy,
success is elusive, and the Finnish economy continues to suffer from the
downfall of the Information and communications technology (ICT) sec-
tor. Moreover, in the third article in this study, the shutdown of the pulp

factory Metsä-Botnia is described as the result of the decision of a distant

company management, without consideration of the local community.
The argument presented in this study, which is based on empirical material
from a small peripheral region, consists of the notion that local communi-
ties cannot wait around for or rely on external investments, but need to by
themselves create favourable conditions for endogen development.



Abstract An evaluation of the nine megatrends visible in society during

the last century is conducted. Since the relation between these trends is
obvious, it is concluded that while other society systems have evolved, the
old liberal democratic system has lingered on and become increasingly
unfitting. Metagovernance is described as an attempt to bridge the liberal
democratic system and the New Governance reality.

Keywords Society megatrends; Reflexive modernisation; Metagovernance

We have been studying nine megatrends of society during the last cen-
tury; five of which involve shifts in the view of democracy and gover-
nance, while four concern economic circumstances (see Table 2.3). These
trends are fundamental when trying to understand the shift of the gover-
nance system we have witnessed during the last decades. It is important to
accept the fact that this development is a result of the consequences of a
changing world, changes that no one has control over. To be explicit, the
changes during for example the last few decades are not merely the effects
of political decisions or ideology, rather, they are the result of changing
circumstances that policymakers have responded to. We have seen the
introduction of more flexible and participative forms of governance,
which accordingly should be regarded as logical adaptations to changing
circumstances. The manner in which such participation is conducted and
legitimised is, however, a political matter. Regarding governance, we have
witnessed both neoliberal and neoinstitutional responses.
When looking at the megatrends, the intertwining of the development
of the system of governance and the development of the economic system
is also obvious, and it is therefore difficult to look at one system and not

pay attention to changes in the other. The transitions described in the

societies concerned are apparent and universal to such an extent that one
cannot help wondering if there is a common denominator behind these
shifts. One answer to this question has already been presented above in the
impact of the Kondriatev waves, which originate from “clusters of innova-
tion” and gradually influence other systems in society. In this view, tech-
nology and innovations form the environment, the limits of life for human
beings, to which social organisation adapts. However, commodities and
gadgets do not alone form the conditions of human life, rather, the impact
of knowledge and rationality has also been described in this study as hav-
ing a fundamental effect on human behaviour. Similarly, in their book
“Reflexive Modernization”, Beck, Giddens and Lash (Beck et al. 1994)
present the argument that society is becoming increasingly self-aware and
reflective, a development which at the individual level implies that people
are more and more shaping their own norms, desires, tastes and politi-
cal views, rather than allowing the society to form these values. Here,
the impact of knowledge, education and the rationality of modernity is
apparent. Looking at politics and participation, a reflexive person is not
likely to settle with merely voting for a political party, especially when the
complexity of society makes the agenda of parties increasingly inexplicit
and fuzzy, as explained in the section on audience democracy.
As discussed above, the shift from centrism to pluricentrism strongly
implies that the nation-state is not any longer the natural demos, a matter
which is certainly also intertwined with the regionalisation of economic
development. The open markets of the globalised order force nation-
states to execute supply-side rather than demand-side investments, in
order to aid the companies in producing competitive products, which also
motivates permitting bottom-up processes and self-governing networks.
Demand-side investments, for the purpose of ensuring the purchasing
power of citizens by relocating industries for instance, did not require
local knowledge in its time, since the particular work of production was
supposed to be the same wherever it happened to be performed. Now,
when innovations and their development are so strongly emphasised in
economic literature, being presented as the dominant factor for achieving
positive economic development and competitiveness, and when the devel-
opment of innovations is said to be best facilitated in regional innovation
systems through networking and interactions, detailed knowledge of the
locality and the specific firms becomes fundamental. In this way, regional
institutions and knowledge bases form the foundation for economic devel-
opment, which in turn stresses the great importance of connectedness,

Table 2.3 The megatrends of Western society. The time periods are approximate
since the trends to some extent overlap
Historicism Modernism Postmodernism
Centrism Pluri-centrism
Liberal democracy Post-liberal democracy
Parliamentary democracy Parties democracy Audience democracy
Government New governance
First industrial revolution Second industrial revolution Third industrial revolution
Fordism Post-Fordism
Keynesian welfare state Schumpeterian workfare state
Industry economy paradigm Knowledge economy

1900 1945 1973

collective support and inclusion, and consequently, these characteristics

could in a way be said to compose the fabric of the post-Fordist soci-
ety. Following this reasoning, the development of a regional development
policy must naturally involve local actors and local knowledge. In order
to make use of knowledge according to local circumstances, the different
concepts of learning that have been discussed earlier are important.
As we have seen, there is an abundance of post-liberal democratic theories,
which all suggest a withdrawal of the state-centric, hierarchic perspective, but
to different lengths. Looking at the implemented reforms, this study argues
that a discrepancy exists between the liberal democratic government insti-
tutions and the post-liberal reality. The role of the nation-state during the
last two or three decades has evidently altered considerably. Jessop (1993)
describes this development as a threefold “hollowing out of the state”, where
state capacities are transferred upwards to international bodies, downwards to
regional and local bodies within the state and outwards to different regional
networks. Even though this transformation is evident, it does not necessarily
correspond to an actual decline of the power of the state. Sörensen (2012:
515), referring to Jessop and others, argues for a reinterpretation of the role
of the state, where its power is retained but where it has given up its sov-
ereign forms of rule. In its place, the state should govern society through
different forms of governance, through the regulation of freedoms, or in the
vocabulary of governance theorists, through metagovernance. Sörensen and
other metagovernance advocates recognise the inevitability of governance
networks, and consequently present metagovernance as the system by which
the liberal system of democracy is able to control the governance networks
and grant them legitimacy (see Fig. 2.1).

The concept of metagovernance implies the use of a diverse box of

tools, by which the post-liberal ideals of participation, self-governance etc.
are acknowledged to various extents. Thus, the use of metagovernance
looks differently at different locations and times, and its democratic quali-
ties are thereby not possible to assess generally. However, metagovernance
does add a link of control over governance networks; whether this rather
indirect link of legitimacy contributes to democracy is a matter that should
be up for debate. Again, more radical post-liberal theorists on the other
hand imply that stakeholder participation and publicity are sufficient for
achieving legitimacy.

2.3.1 Reinventing the Third Way

Classical and liberal democracies were formed to match the societies of
the particular place and time where they were constructed. At present,
we are still in the midst of a transition from liberal democracy to whatever
might follow. Incremental adaptations, such as governance networks, are
already visible. Following the theoretical narrative above, the demand for
this change is mainly caused by pluricentrism and the increased complex-
ity of society; factors making it increasingly difficult for both politicians
and civil servants to understand the specificities of issues and localities in
order to make the best and most efficient decisions. As an illustration of
this point, consider the literature of traditional liberal democracy, where
the argument of efficiency is often used against increased participation.
Input Output

Liberal Government
o Centrism
Democracy o Industry economy


Post-liberal Governance
o Pluricentrism
Democracy o Knowledge economy

Fig. 2.1 Metagovernance bridges liberal democracy and governance networks


Nevertheless, this is precisely the same argument that is used by post-liberal

theorists for decentralising decision-making and increasing participation.
Here, the argument is about the quality of decisions rather than whether
decisions are taken at all. Bad decisions, in bad compliance with local cir-
cumstances and the preferences of people, are also viewed as endangering
the legitimacy of the government, causing apathy among people and even
contempt for politics and politicians. In liberal democracy, the govern-
ment is separated from society and the people do not have a constitutional
role to play. In the post-liberal tradition, “the stakeholder”, the person
claiming moral or economic interest in a particular public decision-making
process, is suddenly equated to “the citizen”, and this certainly constitutes
a paradigmatic shift in democratic theory.
A central question in this volume concerns the interplay between the
economy and politics. Specifically, the part politics should play in influenc-
ing the economy and economic development is questioned, as well as the
manner whereby politics is able to fulfil this. Under the Keynesian Welfare
System this was pretty simple—economic policy emanated from the state
government and trickled down in the hierarchy to the local level in the
form of demand-side investments: redistribution of income and of indus-
tries as well as the diffusion of “big science”. Under the Schumpeterian
Workfare State on the other hand, the influence of politics is fuzzier. Most
obviously, SWS implies supply-side investments, offering services and
funding to companies who essentially receive a more influential position
with larger degrees of freedom. SWS puts innovation at the centre of eco-
nomic development, and consequently, the innovation system is the arena
where the economic, political and knowledge systems meet and interact
for the benefit of the development of society. The concept of the Triple
Helix is the core of this model, with the government, knowledge organ-
isations and companies interacting for the purpose of achieving success-
ful economic development. In this way, politics, or the fashion in which
politics directs economic development, is diffused into networks where
the government is merely one of the actors. Central control is however
maintained through project funding, for which the state government, as
well as supranational bodies such as the EU, produce economic policies in
the form of development programmes, which determine certain objectives
later used in the granting of funding.
Notions of new forms of participation and absorptive processes, such as
different concepts of participative democracy, governance networks, qua-
druple helixes, learning regions as well as transnational, social and policy
learning activities, indicate that economic policy takes place and increas-

ingly will take place locally and regionally, through networks in the vicinity
of users and stakeholders. Following this reasoning, the reinvented Third
Way is not a model directing the future—rather, it is the identification
of trends in society to which political decisions will eventually respond.
Along the lines of the theoretical narrative above, the reinvented Third
Way suggests that the localisation of politics may be beneficial both demo-
cratically and economically, and consequently, allow room for local and
regional processes to manoeuvre. Whether this should be done through
metagovernance or through more radical post-liberal solutions is an issue
that should be on the top of the agenda in all Western societies. However,
these are only theoretical assumptions. In the following chapters we will
look at actual experiences of such processes.

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The Case of Ostrobothnia

The case studies presented later on illustrate the incompatibility between

the state-centric model and the post-Fordist society. The object of study
is the country of Finland and in particular the region of Ostrobothnia
on the west coast of Finland. The characteristics of Ostrobothnia will be
described later on, but concisely put, Ostrobothnia is a sparsely popu-
lated, small and peripheral region with a rather differentiated and export-
oriented industry. In his creative class narrative (Florida 2002), Richard
Florida emphasises the importance of utilising the creative potential of
every person for the benefit of economic development. Florida analyses
dense metropolitan areas and the benefit of achieving interactions, meet-
ing places and a good “people climate” in such regions, and that suburban
car-oriented regions are not able to produce such vibrant circumstances.
In my view, the necessity for utilising the creative potential of people in
peripheral areas such as Ostrobothnia is all the more greater—in an age
where regional equalisation policies are outdated it might actually be the
only way—and combined with global knowledge pipelines, the possibili-
ties for achieving dynamic environments are present also at such locations.
Bevir (2010: 81–82) notes that in a centric and unitary state, such as
Finland, the governance concept might be especially controversial, in
contrast to federal and more decentralised countries. Governance occurs

© The Author(s) 2017 59

K. Nordberg, Revolutionizing Economic and Democratic Systems,
Palgrave Studies in Democracy, Innovation, and Entrepreneurship
for Growth, DOI 10.1007/978-3-319-40633-6_3

through what Bevir refers to as the differentiated polity, i.e. interdependent

governments, organisations, departments and agencies, and this is obvi-
ously in sharp contrast to the characteristics of the unitary state with its
“identifiable polity that has clear boundaries within which law is formed
by sovereign will” (Bevir 2010: 82). The presence of governance networks
has been demonstrated in Finland by for instance Hiironniemi (2005),
who states that “traditional administration gradually transforms into the
control of external and internal networks”. Similar to the interpretation
of metagovernance presented earlier, Bevir (2010: 82) concludes that
the Anglo-governance school identifies financial control, negotiation and
audits as methods for the state to steer governance networks. Although
governance is said to be a controversial concept in unitary states, Peters
(2010: 40) sees Northern Europe and especially Scandinavia and the
Low Countries as the heartland of governance. A question to consider is
whether the reason for this is to be found in a great necessity of flexible
and locally connected governance processes.
In order to shed light on the developments described above, Finland and
Ostrobothnia are an excellent case. Traditionally strong municipalities and a
weak regional level have given rise to customs of localism rather than political
regionalism and consequently a strong presence of actors outside the politico-
administrative system in regional development in Finland (Virkkala 2008:
119). Ostrobothnia is only slightly below the median size of regions in Finland
and is situated well outside the metropolitan area in the south of Finland,
where the concept of “region” is very different from the rest of Finland. The
industry in Ostrobothnia is differentiated, housing the whole range from
high-tech to low-tech companies, a high amount of small- and medium-sized
companies (SMEs) and a few large companies fuelling R&D. The region also
houses both sparsely populated urban areas and larger urban centres. The
region has, through history, been ruled by Swedes, Russians and Finns, and
its bilingualism has helped to maintain connections both nationally and inter-
nationally. All these characteristics suggest that Ostrobothnia is an interesting
case, a networking region in a traditionally unitary state, making use of local
and international knowledge, where there is a need for cooperation between
small rural municipalities, towns, cities and language groups.
This chapter will firstly describe the evolution of the administrative
system and the vertical distribution of power in Finland, secondly, the
economic system in Finland, especially focusing on the system of inno-
vation, and thirdly, a description of the characteristics of the region of


The system of governance and administration in Finland is closely
related to the Scandinavian countries, which implies a strong unitary
state with total responsibility and power as a public authority. However,
local self-governance with municipalities performing a range of services
has its roots in medieval times (Rose 1996: 1). After Finland and Sweden
were split up in 1809, Finland kept its municipal structure based on
parishes, and consequently, the local governance has traditionally been
structured upon a large number of small municipalities (over 600 in the
1930s) with an average size of about 6000 inhabitants in the early 1900s
(Source: Statistics Finland). Finland received its first municipal legisla-
tion in 1865, which was to a large extent a copy of the corresponding
legislation enacted in Sweden a few years earlier (Prättälä 2012: 190).
The most significant difference to Sweden was, however, the fact that
a self-governing regional level was never introduced in Finland, and
this also differentiates Finland from all the other Scandinavian coun-
tries. Instead, the regional level in Finland has traditionally consisted
of state Provincial Offices, which have been in charge of regional devel-
opment, among other things. During the post-war period, the role of
the municipalities increased significantly by the construction of what has
been called the Nordic welfare state. For instance, municipal welfare ser-
vices increased to such a degree that in 1993, as much as 65 % of public
consumption was municipal (Rose 1996: 2). The municipalities are to
date responsible for the most basic services, such as social and healthcare
services, technical and environmental infrastructure services, culture and
education. Joint municipal boards have been permitted for municipali-
ties to arrange common services since the 1930s, and gradually some of
these have also become mandatory. Regional planning offices were one
of the first examples, assuming the responsibility for land-use planning
in 1958 (Westerlund 1989). The joint municipal boards are joint organ-
isations of two or more municipalities, which basically imply an indi-
rect accountability, since the joint boards are not directly elected by the
citizens. This circumstance is problematic, but has been viewed as the
only possible compromise in the political landscape in Finland, since self-
governing regions are stopped by the city-centred parties and large-scale
mergers are hindered by rural parties. Additionally, the municipal legisla-
tion prevents forced municipal mergers (Prättälä 2012: 190). The joint

municipal boards are generally one-task organisations, performing social

and healthcare services, vocational education, culture, planning etc.
Local and regional administration experienced a considerable transfor-
mation in the 1990s, when first, New Public Management ideas, and sec-
ond, participative forms of governance gained traction (compare first and
second waves of New Governance). Globalisation stressed the importance
of efficiency in service production, and at the same time, a EU membership
became topical. Consequently, the Regional Councils were formed as joint
municipal boards by basically extending the regional planning offices with
the responsibility for regional development, a duty transferred from the
state Provincial Offices. In this way, the responsibility of local governance
was generally expanded in the 1990s. Today, sequent to another major
regional reformation in 2010, the regional level is governed by two state
regional organisations, Centre for Economic Development, Transport and
the Environment (ELY-centre) and Regional State Administrative Agency
(AVI), along with the Regional Councils. Regional development is in prac-
tice divided between the Centre for Economic Development, Transport
and the Environment (ELY-centre) which is in charge of funding and
implementation, and the Regional Councils, which write the Regional
Development Programme of the region. This programme should, accord-
ing to legislation, be leading development at the regional level, but as
Article 2 illustrates, the authority of the programme is questionable.
As Article 1 depicts, centralisation has increased in Finland during the
last decade, especially regarding municipalities, where statutory duties
have increased significantly (see Hiironniemi 2013: 27). Looking at
funding, some national development programmes have been abolished
or limited during recent years, in part as a consequence of the financial
crisis, and forthcoming municipal and service mergers strongly follow
the logic of centralisation. Thus, to an increasing extent, regional mobil-
isation and bottom-up processes are facilitated through the funding of
the EU, namely LEADER and the structural funds. These funds sup-
port governance networks through project funding, of which the Local
Action Groups (LAGs) of the LEADER programme are a terrific exam-
ple. Looking at the possibilities for participation according to the logic
of New Governance theory, the development programmes mentioned
above are essential. Moreover, Regional Councils offer other examples,
such as the process of writing the Regional Development Programme
depicted in Article 2, or the Regional Cooperation Group, consisting of
equal thirds of public, private and voluntary representatives. Regional

development companies have been funded through both municipal and

state backing to support subregional business development, and these
agencies withhold a dialogue with a wide range of regional actors, both
private and public, in order to jointly establish a direction of develop-
ment. Deliberative practices have also been introduced as forums in pub-
lic administration, through citizen juries etc. Bäcklund and Mäntysalo
(2010) show, in their sample of five cities, that all offer possibilities for
citizen participation, and the authors conclude that this ideal has had an
influence on the system of governance in Finland. However, the authors
find a discrepancy between the representative system and the participa-
tive practices, displayed in a confusion of how to integrate these new
practices in the old system, how the input of citizens should be handled
and evaluated, and also who is entitled to evaluate it, even resulting
in a single civil servant deciding if the input is relevant (Bäcklund and
Mäntysaari 2010: 347). Thus, the dominance of aggregative democracy
can be said to hinder the more integrative practices of participation,
which illustrates the rigidity and path dependency of the democratic
system, as well as the incompatibility between participation and liberal


Ever since Finnish independence in 1917, the aim of the state govern-
ment has been the diversification of the Finnish economy. Early on, the
state expanded its role in the economy, starting with the acquisition of
the Norwegian forest industry corporation Gutzeit Ltd. in the 1920s
(Lilja et  al. 2009: 59). Following such a path, the Finnish government
established state-driven businesses in a few core branches, such as for-
estry and engineering. After the Second World War, heavy investments in
infrastructure and public service supported rapid industrialisation of the
country, where a growing welfare state also allowed women to participate
in working life. Due to lack of venture capital in Finland, the Finnish
banks received a significant position early on, since loans were often con-
verted to shares in the companies. In this way, the Finnish economy was
one of the most advanced forms of risk sharing systems, with banks, the
state government and the local communities providing financial capital
in order for large companies, in particular, to advance their technology

(Kristensen 2009: 303). In this way, a few core branches, especially the
forest and metal industry, paved the way for rapid economic growth dur-
ing the 1970s and 1980s. This centralised strategy allowed many of the
companies, one of them being Nokia, to diversify their activities and in
this way diversify the whole economy. However, the strategy of supporting
the growth of these large companies involved periodical currency devalu-
ations, a measure which hindered the growth of SMEs (Lilja et al. 2009:
57). The dependence of just a few branches, along with a large proportion
of export going to the Soviet Union, caused a deep economic crisis in the
early 1990s. This crisis may be regarded as the end of Fordism in Finland,
especially regarding the reliance on top-down “big science”.
Thus, the 1990s brought a fundamental restructuring of the Finnish
business system, causing banks to crash and end their dominant position
in the economy. Generally, the economy was opened to globalisation,
for instance by the abolishment of legislation hindering foreign owner-
ship of Finnish-based companies, and since the share prices were very low
due to the recession, foreign capital poured in, enabling new company
investments. Central coordination between all sectors ended, and the
role of the government changed significantly, as the state privatised its
ownership in companies, stopped providing subsidies to companies and
focused instead on advancing R&D.  Here, we saw the introduction of
the Finnish NIS, which basically implies decentralised participation, while
remaining centrally coordinated. This was the new “national project”,
where companies and the government joined forces to counteract the
economic recession. Globalisation raised the stakes for companies since
radical innovations were needed more frequently to remain competitive,
and for this, the R&D investment strategy suited all the better. Thus, three
systems of the economy were restructured in the 1990s: first, we saw the
end of the national bank-based financial system and the start of an open
financial market-based system, second, successful globalisation of many
Finland-based companies and third, the alteration of state intervention in
the economy, towards privatisation and indirect support to the industry
through NIS (Lilja et al. 2009: 62). This is an economic system that has
left the Fordist era while still maintaining central coordination.
The NIS concept originates from the Organisation for Economic
Co-operation and Development (OECD) committee for technology
and innovation policy, who in the end of the 1980s and beginning of
the 1990s searched for a descriptive R&D policy model to present as
advice to OECD member countries, building on the growth industries

of the time, ICT and biotechnology, and the manner in which knowledge
was created in universities and later diffused to firms in these industries.
Mariussen (2006) views the NIS approach as non-academic, purely using
the economic perspective and comprehending firms as black boxes and
accordingly as purely rational actors. Mariussen contrasts NIS to National
Business System theory (NBS), which regards “patterns of innovation as
being determined by dominating forms of firm organisation, explained
by nationally specific cultures of risk taking and risk sharing” (Mariussen
2006: 223). Thus, the NIS may be regarded as being related to rational
choice theory, while the NBS view is that the rationality of actors is depen-
dent on the context, a notion building on institutionalism. Accordingly,
the NBS explains variations of innovation patterns in different economies
with institutional differences. Lilja et al. (2009: 61) present the Finnish
NIS as a funding scheme consisting of four elements:

1. “A cluster-based strategy for concentrating and upgrading compe-

tences” was launched, where existing or potential industrial clusters
were sought that could become the basis for the renewal of the econ-
omy. Existing knowledge interacting with new technology was expected
to enhance competences of clusters.
2. The funding of R&D should be raised from 2 to 3 % of GDP, an objec-
tive fulfilled in less than a half decade with the aid of both state and
company funding.
3. A major reform of tertiary education resulted in 29 education insti-
tutes, receiving status of universities of applied sciences/polytechnics at
80 different locations. These new education units were able to grant
Bachelor’s degrees as well as act as central institutions for regional
development, and in that manner diffuse knowledge and technology to
localities in respective regions.
4. New national funding programmes were introduced, such as the
Centre for Expertise Programme (OSKE) introduced in 1994, encour-
aging firms, universities, polytechnics and research institutes to form
networks of R&D, thereby constituting regionally relevant compe-
tence concentrations.

The characteristics of the Finnish NIS are consequently based on the

logic of central coordination and knowledge diffusion, but the reinforce-
ment of rather autonomous regional education organisations also facili-
tated bottom-up processes of knowledge creation. Mariussen (2006: 230)

describes the Finnish business system as highly transformative, due to

its ability to turn around the economy in the 1990s by adapting to new
demands without being restricted by old industrial traditions. The suc-
cess of the Finnish NIS was the dynamic adaptability of a coordinated
economy and “inter-sector coordination, where technology and innova-
tion policy was paradigmatic” (Mariussen 2006: 230).
Until the year 2000, adaption to globalisation was thus implemented
mostly through centralised initiatives, but gradually after the turn of the
century, decentralised path creation was allowed. Different branches, such
as the booming ITC sector with Nokia as the flagship, were able to change
the rules of the game within its sector (Lilja et al. 2009: 66). The Finnish
NIS was updated by identifying strategic concentration areas in research
and development, as in the case of OSKE and the consecutive Innovative
Cities Programme (INKA, introduced in 2013), which have both assigned
different competences to urban regions around the country. TEKES, the
state R&D funding agency, offered funding for research projects requir-
ing the participation of both universities and companies. In 2008, a new
Finnish national innovation strategy was launched, which introduced more
user- and employee-driven innovation processes (Lilja et  al. 2009: 93).
Along with EU funding and other national funding programmes, “col-
lective network-based actor identities across sectors and types of actors
at the local and the regional levels” were created (Lilja et al. 2009: 92).
Looking at companies, experimenting with organisational practices had
become common within the metal, engineering and electronic industries.
Foreign multinational companies, as well as national ones, allowed local
actors to suggest bottom-up processes for improving their role in cus-
tomer relationships, among other things (Lilja et al. 2009: 92). Thus, we
witness a general realisation both in the private and the public sector of
the importance of looking for opportunities for development on multiple
levels. This could also be described as an acceptance that radical innova-
tions are best facilitated in a setting characterised by the open innova-
tion paradigm, a theoretical model introduced by Chesbrough in 2003
(Chesbrough 2003), suggesting developing innovation through collabo-
ration with people outside the organisation, including customers, vendors
and competitors. Thus, during the first decade of the new century, the
Finnish national business system in Finland to some extent shifted from
central coordination to decentralised experimentation occurring on all
levels and demanding both vertical and horizontal synchronisation (Lilja
et al. 2009: 67). The RIS paradigm has accordingly had its influence on

the Finnish NIS, but still, central coordination lingers on, for example in
the government decision to assign the Smart Specialisation Strategy of
the EU, where bottom-up processes are fundamental, to the state agency
TEKES rather than permitting strict regional coordination.
To sum up this far, prior to the 1990s, the Chandlerian Innovation
System (ChIS) prevailed in Finland, a system whereby governments are
responsible for basic science, while companies construct research labora-
tories and handle the adoption of science to products. The Networked
Innovation System (NeIS) that emerged in the 1990s, on the other hand,
builds on the recognition that clusters of SMEs are more inventive than large
firms, and able to organise production in a more flexible way (Kristensen
2009a: 15–18). Until the 1980s, the banks and the state government were
the primary actors in the Finnish economy, allowing for risk sharing and
diversification of the large companies. In the 1990s, national companies
were globalised, and in the 2000s, international companies became the
focal actor in the Finnish national business system. In the current system,
incremental innovations are mainly facilitated through supplier–vendor
relations, while radical innovations occur through networking between
companies, R&D organisations and universities (Lilja et al. 2009: 67).
The crisis of the 1990s in Finland, and the other Nordic welfare states,
implied restructuring away from the Keynesian Welfare State towards an
enabling welfare state allowing for what has been called experimentalism
or experimentalist forms of economic organisation. The success of the
Nordic countries, especially during the first years of the economic crisis
starting in 2008, has rendered great attention to this model, and although
there are significant differences between the countries, some common
characteristics are found. Similar to the Schumpeterian Workfare state,
the enabling welfare state is supply oriented, offering enabling services
where individuals, companies and the state share the risks of experiments
(Kristensen et al. 2009: 10). However, evidence from the USA shows that
the transition from KWS to SWS has caused difficulties for both middle-
and low-income families. Kristensen et al. (2009: 33) point out the “pro-
jective city” concept introduced by Boltanski and Chiapello (2007) and
its notion that people with a high degree of mobility have an advantage
in the experimentalist economy as they are able to pursue job opportuni-
ties, typically in the form of projects. In contrast, people who are bound
by traditional occupations, family etc. never receive the chance to enter
the project occupations and the possibilities for personal development and
economic success these offer. The concept of an enabling welfare state

instead views welfare services as enabling factors for people, increasing

their mobility and opportunities to participate in the “projective city”. A
rare combination of high equality (low risk of poverty) and high efficiency
(sufficient incentives to work and accordingly low unemployment rates),
has been singled out as the main factor behind the success of the Nordic
Model (Kristensen et  al. 2009: 34). Moreover, Kristensen et  al. (2009:
33–44) identify three factors as evidence for the enabling quality of the
Nordic welfare states:

1. A high level of education is considered as an enabling factor. In the

Nordic countries, 75 % of citizens aged 25–64 possess at least an upper-
secondary education, compared to 67 % in continental countries, 60 %
in Anglo-Saxon countries and 39 % in Mediterranean countries (Source:
OECD 2006).
2. Through welfare services and support, the state shares family and work-
ing life risks with the citizens, enabling them to dare to transform, to
re-educate and to move from one location to another, in order to seize
opportunities and move from low-income to high-income situations.
3. Social services make it possible for citizens to live a “non-routinised,
non-space- and profession-bound life for both females and males”
(Kristensen et al. 2009: 37). For instance, the Nordic countries display
the highest share of full-time working women in double income fami-
lies of the OECD countries (Source: OECD 2007), a fact that certainly
owes much to a significantly higher level of parental leave benefits and
child day-care expenditures than other EU countries, the latter amount-
ing to 421 % of the EU15 average (Source: Eurostat 2008 in Kristensen
et al. 2009: 40). In contrast, less-enabling systems are characterised by
the need for insurances, which ultimately create unequal capabilities to
deal with risks.

In addition, Kristensen et al. (2009: 46) see the wide range of respon-
sibilities put on the local level as a strongly contributing factor for the
successful adaptation of globalisation in the Nordic countries. The system
of welfare services was originally constructed by the municipalities, a setup
enabling a close connection between the welfare institutions and the users
of services, and this circumstance is believed to allow for the “situational
co-design of public services” and, in turn, novel problem-solving. During
the last ten years, major enlargements of municipalities have been dis-
cussed in Finland, which are aimed at achieving a reduction to about 70

municipalities. This enlargement is primarily justified by the argument of

maintaining the municipal structure which has produced these enabling
welfare services. On the other hand, the fact that enlargements certainly
involve centralisations makes the enlargement strategy ambiguous, since
this obviously represents steps away from a system of closely connected
service providers and users.
Although the spending on welfare services is generally at a high level
in the Nordic countries, R&D expenses vary greatly. In 2006, Denmark
was a middle range country in terms of public spending on R&D, while
Finland, Sweden and Norway spent much more, with Finland at the top
(Kristensen et  al. 2009: 26–27). In Finland and Sweden, the spending,
and risk sharing, is to a large extent shared between companies and the
state government. The Finnish national business system (NBS) has suc-
cessfully facilitated connections and joint efforts in the Finnish economy,
as a survey conducted by the EU in 2000 showed that 70 % of innovat-
ing Finnish companies had established contacts with universities or R&D
institutions, the highest share of all EU countries (Kristensen et al. 2009:
28). The third European Survey on Working Conditions undertaken in
the EU15 in 2000 showed that work is organised in a different manner in
the Nordic countries compared to other EU countries, with significantly
stronger elements of learning (see Lorenz and Valeyre 2003). Here, learn-
ing implies a “high degree of task complexity” and “learning is continu-
ous as employees are expected to take initiative and to exercise autonomy
in resolving the production and service-related problems they confront”
(see Lorenz and Valeyre 2003: 17). In a similar survey in 2007, Norway,
Finland, Denmark and Sweden all combined the highest degree of work
autonomy with the highest degree of work-intensity. As Kristensen et al.
(2009: 32) put it, “in the Nordic countries all employees work as if they
were managers”. The Nordic countries thereby strongly display charac-
teristics of a NeIS, since it is the demands from customers, suppliers and
colleagues rather than from superiors that set the pace of work. This is a
case of allowing local problem-solving, as Mariussen (2008: 249) explains,
relying on data from the European Working Conditions Survey:

Nordics are allowed to apply their own ideas at work to a greater extent
than other Europeans. Here, Sweden and Finland are in the lead, with 73
per cent and 72 per cent (allowed to use own ideas, my remark), as opposed
to only 49.8 per cent of the Germans, 58 per cent in the UK and 58.4 per
cent in the EU27.

Although the Nordic countries are characterised by high-technology

and high-quality product markets, which naturally require a capacity for
continuous upgrading and learning, Kristensen et al. (2009: 33–34) see
the mobility-enabling character of the welfare state, as described above,
as the most important explanatory factor for the differentiation of the
Nordic countries in this regard. Many firms in the Nordic countries do
not simply supply customers with goods, but receive feedback by mov-
ing the product close to the customers, and in this manner are able to
solve increasingly complicated problems, or aim at reaching increasingly
sophisticated customers. The learning characteristic of the Nordic firms
implies that they are flexible and able to rearrange roles and routines as
the customers and the relation to customers change, and consequently,
firms may form a dense network with other firms, customers and suppliers.
Kristensen (2009: 299) sees these characteristics as evidence for an adapta-
tion to reflexive modernisation, as described by Beck et al. (1994: 120):
“What indeed underpins reflexivity is … an articulated web of global and
local networks of information and communication structures.”


Ostrobothnia is one of a total of 18 NUTS-3 (Nomenclature of Territorial
Units for Statistics) level regions in Finland, situated on the west coast, well
off from the so-called growth triangle in the south between the cities of
Tampere, Turku and Helsinki. Ostrobothnia is slightly below average in size
in Finland, with a population of 179,000 and a surface of 7749 km2, adding
up to a 23.1 per km2 density, which is well below the European average of 116
but above the Finnish average of 17.8 (Source: Eurostat 2012). The region
distinguishes itself as the most bilingual region in Finland, with a Swedish-
speaking majority of 51 % and a Finnish-speaking minority of 45 %. The city
of Vaasa with 66,000 inhabitants is the capital, as well as the economic and
research and innovation centre of the region. There are four subregions in
Ostrobothnia, the Vaasa region (ca 99,000 inhabitants), Syd-Österbotten (ca
18,000 inhabitants) to the south, the Jakobstad region (ca 45,000 inhabit-
ants) to the north and Kyrönmaa (ca 17,000 inhabitants) to the east.
As explained above, the region of Ostrobothnia is based on the admin-
istrative area of the Regional Councils constructed in 1995, and prior
to this, only one-purpose joint municipal bodies were present as self-
governing regional organisations, such as the land-use planning agencies.
However, at that time, the primary regional administrative unit was the

state regional unit of the Province of Vaasa, which also covered Central
Ostrobothnia to the north of Ostrobothnia and South Ostrobothnia to the
east. Still, despite 20 years having passed, structures and patterns of behav-
iour still exist that disregard the new regional boarders of 1995, as in the
case investigated in the fourth article, the technology development centre
KETEK, which is operated and funded jointly by the Kokkola region in
Central Ostrobothnia and the City of Jakobstad in Ostrobothnia. The
Kokkola-Jakobstad region is in many respects one economic region, with,
for example centuries-long common traditions of boat manufacturing, a
branch that is still strong in both Kokkola and Jakobstad. Kyrönmaa and
Syd-Österbotten are mainly rural areas with declining populations. The
third article deals with the town of Kaskö and Syd-Österbotten, where the
industry is generally decreasing, but where greenhouse cultivation and the
metal industry especially are still of significance.
The Vaasa region is economically the central hub of Ostrobothnia,
with the highest GDP, growth rates and the largest population. The Vaasa
region houses what has been called the largest energy sector cluster among
the Nordic countries, and this cluster is considered to be the economic
growth source of the whole region.
In 2008, 6.3 % were employed in the agricultural sector in Ostrobothnia,
32 % in industry and 60 8 % in the service sector (Source: Eurostat 2011).
Compared to the national average (3.7 %, 23.9 %, 71.6 %) and the EU15
average (3.5 %, 26.2 %, 69.7 %), we see that agriculture and industry are
stronger and the service sector is less relevant in Ostrobothnia, but in
recent years, there has been an ongoing shift towards the service sector
(Regional Council of Ostrobothnia 2013). Looking further at employ-
ment, 70.7  % of 20 sixty-four-year-olds are employed, which is slightly
above the national average of 69.9 % (Source: Eurostat 2011). Generally,
Ostrobothnia is regarded as a rather successful region, especially during
the years since the start of the economic crisis in 2008, a fact owing to
the strongly trade-oriented economy, with exports amounting to €3.6b
in 2010, which in relation to the population size makes Ostrobothnia
one of the most export-oriented regions in Finland (Regional Council
of Ostrobothnia 2013). With regards to industrial production, 60  % is
exported, and regarding the important renewable energy sector, this share
is as much as 70 %.
Although Ostrobothnia has a large share of SMEs, there are some
international companies present, such as ABB, which are especially
significant for research and development in the region. Research and

innovation are mainly performed by firms acting in the new energy

sector and related industries, concentrated to the Vaasa region. The
public sphere contributes with an unusually small share of research
expenditures in the Finnish as well as the European context, with the
large multinational companies funding the major part. SMEs participate
to some extent and are able to benefit from the research projects con-
ducted by the large companies. In 2008, R&D expenditure per GDP
(GERD) was 2.55 %, far below the national average of 3.9 % but above
the EU-27 (1.85 in 2007) (Regional Council of Ostrobothnia 2013).
The most common way of measuring innovation is counting patents per
capita, and here, the Province of Länsi-Suomi (NUTS-2 level region,
data missing for NUTS-3) ranks second among the NUTS-2 regions in
Finland. The system of higher education is important to the region, with
universities and universities of applied sciences often cooperating with
the business sector in development projects. The University of Vaasa
and Vaasa University of applied sciences as well as Novia University
of applied sciences have for instance formed a joint research labora-
tory in cooperation with companies in the region. Other higher educa-
tion units are Åbo Akademi University, Hanken School of Economics,
Western Finland’s design centre MUOVA and Vaasa Energy Institute
(Regional Council of Ostrobothnia 2013). Regarding the education
level of citizens, 26.1  % of the population older than 15  years has a
tertiary education degree, which is well below the national average of
38.1  %, but on a par with the EU-27 average. However, the strong
presence of education units in the region is visible in the number of
tertiary students, amounting to 69.5 per 1000 inhabitants, which is well
above the national average of 55.7. As described above, flexibility of the
economy is very dependent on further education of adults, and here,
Ostrobothnia has a share of 21.7 % of adults aged 15–64 participating,
compared to the national average of 23 % and the EU27 average of 9.1
(Source: Eurostat 2011).
Looking at the governance system in Ostrobothnia, the Regional
Council acts as the authority for regional development, for instance
by writing the Regional Development Programme in cooperation with
a large range of private, public and civil society actors, as described in
Article 2. The target of the Council is to “promote regional development
initiatives and regional balance” (Regional Council of Ostrobothnia
2013). Also important for the governance system are the regional
development companies, VASEK in the Vaasa region and Kyrönmaa,

Dynamo in Syd-Österbotten and Concordia in the Jakobstad region,

and these develop “operational preconditions for companies and coor-
dinate co-operation between municipalities and between education,
research and economic life” (Regional Council of Ostrobothnia 2013).
Of course, the ELY-centre of the region has a decisive position, imple-
menting policies, giving guidance, expert services and financing, as well
as acting as the local unit of the state funding agency for innovation and
technology TEKES. For R&D and innovations, the technology centres
of Merinova in Vaasa and KETEK in Kokkola, as well as Vaasa Science
Park and Viexpo, are important, cooperating with and connecting com-
panies in respective areas. Regarding EU funding, European Regional
Development Fund (ERDF) is administered by the Regional Council,
while the state regional administration is responsible for European
Social Fund (ESF). Through the LEADER approach, the LAGs Aktion
Österbotten and Yhyres act as regional hubs funding local projects. To
some extent, the practice of citizen juries has been implemented by
municipalities and other public organisations, generally in order to pick
up ideas from civil society. Thus, although the Finnish political system is
still characterised by a strong state, Ostrobothnia maintains a structure
of governance with some degree of self-governance, with the participa-
tion of municipalities, state government units, development agencies,
private companies and to some extent also the civil society.
Ostrobothnia is a rural and peripheral region with a few urban cen-
tres. As we have seen, despite the peripheral location, the economic
development of Ostrobothnia is above average among the regions
in Finland. Despite the fact that the Finnish tradition of strong state
political steering does not offer expectations for connected and flex-
ible regions, somehow Ostrobothnia seems to have managed to adapt
quite well to the post-Fordist economy. At the same time, the bilingual-
ism of the region presents both opportunities for strong internation-
alisation and difficulties for cooperation. All these factors add up to
Ostrobothnia being a very interesting case when studying postmodern
processes; the case studies presented below display evidence of connect-
edness and disconnectedness, cooperation and conflict. The selection
of Ostrobothnia as a case study should not be comprehended as an
attempt to find best- or worst-case scenarios, but as an attempt to find
an arbitrary case, which is well away from metropolitan growth areas,
while still managing to become economically sustainable.


The purpose of this volume is to set up the framework of the reinvented
Third Way, and later apply it to the four studies presented below. For the
sake of contextualising the case studies, the economic and political sys-
tems in Finland and Ostrobothnia have been presented above. Despite
the fact that a differentiated polity looks like an unlikely occurrence in
unitary states, we still see a general presence of participative platforms
in the Nordic countries as well as in Finland and in Ostrobothnia.
However, as Bäcklund and Mäntysalo (2010) have established, these
participative forms of democracy and their output are not integrated
into the representative system in a systematic fashion. The regions in
Finland have traditionally been weak, but the municipalities have on
the other hand possessed a strong position by serving as platforms for
expanding welfare services. In this way, the enabling welfare state has
been developed, offering flexible services close to users. As previously
stated, this setup is very much the foundation for the success of the
Nordic countries. Currently, the room for municipalities to manoeu-
vre is shrinking as a result of a weakening financial situation, largely
due to an increasingly troublesome demography as well as a grow-
ing amount of legally stipulated tasks. The solution presented to these
problems during recent years has been extensive enlargements on both
the municipal and joint municipal board levels; a policy acting against
the above mentioned flexibility, which in turn certainly presents fur-
ther legitimacy difficulties to the representative system. Looking at the
economic system, the NIS has gradually been transformed to the char-
acteristics of a RIS, while still under firm centralised control. On the
company level, decentralisation is visible in the autonomy of workers,
offering flexibility and an absorptive capacity, while at the same time
Triple Helix-relations are abundant in a European or a Nordic context.
Looking at the Ostrobothnian economy, the region displays a high level
of R&D and education, corresponding to the concept of the enabling
welfare state. Relating back to the argumentation of the “culturifica-
tion” of products, although the industry in the region displays more
similarities with traditional manufacturing, the level of refinement is at
a high level, especially regarding the renewable energy sector.
In order to substantiate the theoretical notions presented above, four
articles will offer empirical experiences. The megatrends that have been
presented are general and, as we have seen, Ostrobothnia is not in any

sense a homogenous region. Consequently, the expectation would be

to find adaptations of the theoretical framework to varying length and
scope, which is certainly the case in the articles presented here. The case of
Ostrobothnia should be understood in broad terms: we are not looking at
the region as a territory marked by strict borders, rather, we are looking at
many different “places”, of different scale and scope, adjusted to the spe-
cific subject or context we are dealing with at the moment. Accordingly,
only one article studies Ostrobothnia corresponding to the administrative
area of the Regional Council of Ostrobothnia (Article 2), while the others
look at subregions (Articles 3 and 4) or Ostrobothnia when understood as
a regional governance network, which basically may include other regions
as well (Article 1).

Nordberg Kenneth (unpublished manuscript), Attempts at Regional
Mobilisation in a Unitary State—Two Decades of Learning and
The purpose of this first article, on the one hand, is to contextualise
the prerequisites for flexible self-governing local entities in a unitary
Nordic state such as Finland. On the other hand, this article devel-
ops and tests decisive factors for regional mobilisation. The knowledge
about the actual implementation of flexible, self-governing networks
or regions is of course extremely relevant when looking at the new
forms of economic and democratic conduct presented in the theoreti-
cal narrative above, especially when the subject of investigation, a small
unitary state, is not expected to allow for self-governing practices. The
article investigates the capacity of learning when member states are
confronted with the regionalisation agenda of the EU, i.e. the manner
in which the regional agenda of the EU is implemented in regions.
The theoretical background is the transition from geopolitics to geo-
economics, from the Keynesian Welfare State to the Schumpeterian
Workfare State, a shift implying that national territoriality is no longer
aligned with national economic interests. The state governs through
market control and the promotion of “city regions” rather than the
implementation of national policies.
The article describes the evolvement of the regional level in Finland
over two decades, starting in the early 1990s, when a wave of regional
reforms reduced state involvement and constructed new regional

authorities, and onwards to the 2000s, when a second wave of reforms

further institutionalised the regional units. Additionally, the influences
of European and Finnish national development programmes on the
possibilities for regional mobilisation are investigated, and found to be
somewhat inconsistent. A series of interviews have been conducted with
both state government officials and regional actors in Ostrobothnia and
at the state level in order to receive a perception of the actual approach
at the regional and national level to the European regionalisation policy.
The article offers two main findings. First, the possibilities for regional
mobilisation in Finland are defined as growing substantially in the 1990s,
due to adaptations to the EU among other things, but in the 2000s,
this room for manoeuvre has gradually been reduced. Second, although
funding programmes have increased the possibilities for regional mobil-
isation, during recent years, partly as a consequence of the financial
crisis, state funding has decreased substantially. The experience at the
regional level is consequently that regional mobilisation is increasingly
dependent on EU funding, while the state government increases its
steering. Thus, the regional policy of the EU is the Union’s way of
surpassing the state governments, while the states at the same time
attempt to maintain control. The conclusion of relevance for this study
is consequently the visibility of a path dependency, in other words, the
rigidity the unitary state displays regarding new forms of economic and
democratic conduct. This is in accordance with the strategic relational
approach (SRA) of Bob Jessop (Jessop 2008), suggesting that states are
controlled by different alliances of leading actors who create a shared
strategy, which is based on structures and constraints embedded in the
history of the state. In this way, actors such as leading political parties,
large companies, interest groups and civil society organisations form
long-term strategies, which in turn form the main structures within the
national system. These structures act as selection mechanisms, which,
on the basis of the existing structural strategy, may either approve or
deny suggestions for change. According to Jessop, these are the rea-
sons for differences in characteristics between states. However, Jessop
does emphasise that these structures are open for transformations, in
instances when actors are open to the possibility for change. Thereby,
the path dependency detected in the article is expected, but should not
be comprehended as a settled status of a unitary state, since the alliance
strategies evolve over time.

Nordberg Kenneth (2014), On the Democracy and Relevance of
Governance Networks. Scandinavian Journal of Public Administration,
Vol 18, No 2.
For the purpose of this study, i.e. to examine new economic and demo-
cratic conduct, the second article investigates democratic practices and
the importance of actual self-governance for achieving legitimacy for the
new forms of governance practices. The subject of study is the planning
process of the Regional Development Programme in Ostrobothnia car-
ried out in 2009 and 2010. The main research question of the article
concerned establishing whether the relevance of the output of a gover-
nance network is decisive for its democratic contribution. The indifference
for political participation is an urgent problem in contemporary societies,
and as a consequence, new forms of participation have been advocated
by researchers and politicians. Examples can be found in the model for
regional development of the EU, which presupposes the involvement of
local actors, and in the research field of deliberative democracy, through
which the practice of citizen juries has become increasingly frequent in
political decision-making. The study in the article compares the operations
of the governance network in question with democratic ideals found in
governance network theory and deliberative democracy theory. The plan-
ning process is studied by investigating working group documents, min-
utes of meetings and by conducting a series of 16 interviews with selected
participants of the planning process. Approximately 140 individuals repre-
senting all three society sectors participated in this process in ten working
groups and five subordinated groups. The process was, in principle, open
for participation by everyone, in practice, only invited individuals took
part, and these were individuals selected by the Regional Council for their
competence and their association with the specific subjects of the work-
ing groups. The Regional Council followed two unofficial principles for
the selection: first, to gather the acquired knowledgeable actors, second
to attempt to include also marginalised actors. Looking at the process as a
whole, the article concludes that the inclusion is broad, covering all soci-
ety sectors and many different kinds of interest. Generally, although the
article finds considerable agreement between the theoretical ideals and the
practices found in the planning process, especially regarding the delibera-
tive principles, the interviews raised suspicions of whether issues of con-
flict were actually dealt with. A participative platform positioned outside

a traditional representative system, such as the planning process studied,

is not regarded by the participants as the arena for settling conflicts and
producing agreements, although the Regional Development Programme
by legislation is appointed as the leading programme at the regional level.
Accordingly, the contrast between casual conversation and discussions for
deciding crucial issues becomes a central point for understanding the rele-
vance of a governance network, and in turn, the democratic value of such a
network. The main finding of the article, also relevant for this study, is that
for participative forms of democracy to work, to function in a democratic
manner and contribute to the democracy of a society, their output must
be of relevance. Otherwise, these kinds of platforms cannot be integrated
with the representative system; instead, they merely act at the side of it, as
forums for more or less casual discussions.

Nordberg Kenneth (2013), Is there a Need of Transnational Learning?
The Case of Restructuring in Small Industrial Towns in Mariussen, Åge,
Virkkala, Seija (Eds) Learning Transnational Learning, Routledge,
The third article looks at the subregion of Syd-Österbotten (called
Southern Ostrobothnia in the article), in particular the small town of
Kaskö, and the mobilisation process initiated there as a consequence
of the shut-down of a large pulp mill. This article is a part of LUBAT
(Lärande om Utveckling i Botnia-Atlantica), a project examining possi-
bilities for transnational learning between Nordic countries by studying
the national and regional contexts of the two countries in question and
judging possibilities for making use of good practices in one country in
the institutional context of another. Kaskö is a small town of only 1400
inhabitants, depending heavily on the pulp mill, which was present in
the town for over 30  years, employing close to one-third of the popu-
lation when counting also linked industries. The town of Kaskö has in
this manner depended heavily on Fordist manufacturing industries, a cir-
cumstance visible also in the restructuring efforts deployed. When study-
ing the mobilisation process in Syd-Österbotten, the policy for industrial
restructuring in Norway was studied as an ideal case. Norway, a coun-
try with a mountainous geography and scattered natural resources (e.g.
mining products and hydroelectric power) naturally houses an abundance
of peripheral, inaccessible one-company towns, and has accordingly had

every reason to develop a functioning strategy for making these kinds

of towns sustainable in the long run. In contrast to Great Britain, for
instance, which in the 1980s turned to opening up the market in order to
attract foreign investments, the Norwegian policymakers concluded that
the small and peripheral communities in Norway are not able to withstand
the global competition for investments. Instead, the Norwegian strategy
basically entails a continuous restructuring of the regional economy, in
order to diversify it, so when the main industry sooner or later collapses,
other industries are able to take over as supporters of the community. The
Norwegian strategy implies a high degree of cooperation, inclusiveness
in decision-making and consensus about long-term development objec-
tives, with the aim of achieving general agreement about the allocation
of resources for situations that can occur in the future. This is in direct
contrast to the crisis-based interventions in the case of Syd-Österbotten,
which mainly consisted of attracting replacing industries. Consequently,
an opportunity for transnational learning was present. For the sake of the
study, the local and regional structures were investigated in the respec-
tive countries, as well as legislation on restructuring and restructuring
practices. Additionally, 13 interviews were conducted with key actors of
the restructuring process in Kaskö and Syd-Österbotten. Two main dif-
ferences were identified between the Norwegian policy and the case of
Syd-Österbotten: first, when restructuring efforts are implemented at the
regional level in Norway, the Finnish administrative structure emphasises
municipal governance; second, Norwegian legislation forces the company
in question to assume responsibility for the community it is acting in, also
encouraging joint action between actors, while a corresponding legisla-
tion is not present in Finland. As a consequence of these two factors, a
range of actors, among them a number of small municipalities, needed
to quickly reach an agreement for restructuring efforts when the close-
down in Kaskö occurred. This allowed the company to act selfishly and
the neighbouring municipalities to leave Kaskö to its misery. Cooperation
difficulties between the municipalities in Syd-Österbotten have been com-
mon in the history of the region, mainly due to language differences and
strong local cultures, with unsuccessful attempts to form a joint regional
business development agency as perhaps the most aggravating example. In
the case studied, the competition for tax payers between the municipalities
was preferred over a common restructuring effort, i.e. the municipalities
refused to establish a joint restructuring organisation since the efforts of
the organisation might just as well have become directed to the other

side of the municipal boarder. In this way, the region of Syd-Österbotten

lacked the readiness displayed by a structure geared towards long-term
restructuring. For the sake of this study, the findings in this article first
and foremost display the lack of connectedness and its negative effects
described in economic literature. Second, democratic implications are vis-
ible in the rigidity of a structure allowing only municipal and national
arenas for action. When the main actors are small municipalities, these can
be played off against each other, while on the other hand, if municipalities
become larger, the possibilities for local arenas to turn to action vanish.
Thereby, the findings in this article suggest allowing functional structures
according to local circumstances and particular subjects, in accordance
with the ad hoc character of governance networks.

Nordberg Kenneth (2015) Enabling Regional Growth in Peripheral Non
University Regions—The Impact of a Quadruple Helix Intermediate
Organisation, Journal of Knowledge Economy.
The fourth article investigates the Kokkola-Jakobstad region, a case
study describing the manner in which an increasingly dynamic innovation
environment is enabled in a peripheral region through a differentiation of
both the knowledge and the political systems. The system for innovation
in the region is examined through depicting the development path of the
technology centre KETEK, an organisation starting off as a small research
unit of the secondary school Kokkola Technology Institute and evolving
step by step into a central actor for R&D in the region. Interviews with
regional actors, company representatives and KETEK personnel, as well as
the investigation of a number of strategy programmes and annual reports,
form the empirical basis for this study. As a theoretical framework, the
Smart Specialisation Programme of the EU, with its emphasis on the theo-
retical concepts of the Mode 3 Knowledge Production System, Quadruple
Helix Innovation system and related variety, is used in order to understand
the dynamics of the system of innovation surrounding KETEK. The main
objective of the article is to determine whether a non-university town is
able to withstand global competition by setting up an intermediate organ-
isation. A secondary question concerns whether the alteration of the
fourth helix (which is defined as “society” or “the general backdrop” to
regional and local activities) may open up the Triple Helix actors towards
each other, thereby attuning a region to creativity and innovation.

Here, KETEK and the Kokkola-Jakobstad region display similarities

with the concept of Mode 3, which basically implies external connections
to national and global innovation networks at the same time as promoting
a close interplay between a range of actors, firms and knowledge organisa-
tions, combining different kinds of knowledge and innovation modes. In
this way, the article argues that the impact of the fourth helix in a periph-
eral non-university region is more apparent than in a large metropolitan
region, where strong knowledge organisations and companies are, to a
larger extent, able to act disregarding the society it is active in. The sec-
ond argument in the article is that certain alterations in the fourth helix
give rise to the potential of opening the actors in the triple helix towards
each other for the purpose of developing innovations. Accordingly, and
in contrast to the third article, the importance of connectedness is here
illustrated as beneficial for economic development.
The Kokkola-Jakobstad region and KETEK form an example where
a range of actors are interconnected, allowing for different knowledge
types to interact. Looking at the democratic aspect, the case illustrates
the manner in which arenas for cooperation are constructed according to
functional needs, disregarding municipal or regional borders, especially
when considering the fact that the regional border between Ostrobothnia
and Central Ostrobothnia cross the subregion studied. The article ends by
introducing the concept of a Quadruple Helix intermediate organisation,
which basically corresponds to an organisation promoting the inclusion of
firms, citizens and users while simultaneously improving the knowledge
environment of a region. Here, a research and development organisation
approaches the activity of a participative functional arena even bringing
accountability to its decision-making.


In contradiction to the virtues of bottom-up processes discussed in this vol-
ume, the findings of Article 1 describe a path dependency of state societies
basically obstructing adaptations to pluricentrism. Accordingly, the article
suggests a rough ride for attempts to implement new forms of participative
democracy in the unitary Nordic countries. In the case of Ostrobothnia,
we have witnessed the presence of both resourceful governance networks
and advisory forums. Here, Article 2 suggests that for participative net-
works to act in a democratic fashion, a prerequisite is that definite author-
ity is assigned to them. Provided that participative networks are merely in

the form of advisory forums, and the actual decisions are taken elsewhere,
their democratic potential will not be fulfilled. Characteristics of meta-
governance are visible in this case through directives for the contents of
the programme, for instance the demand for compliance with national
and EU objectives. In practice, the regional programmes end up being
very similar to the development programmes written by state regional
authorities. In Article 3, a municipal structure is depicted where small
autonomous units escape obligations to joint action, a circumstance which
basically may sabotage possibilities for long-term development planning.
Together, the first three articles demonstrate the manner in which bot-
tom-up regional development is caught between local patriotism and state
government control. Sjöblom and Andersson (2016) argue that regional
development projects are key devices for policy implementation, that they
need to be spatially integrative by crossing geographical borders, and
horizontally integrative by enforcing collaboration between government
and non-government actors and by promoting participation and infor-
mation exchange. Discussing Finnish conditions, the authors conclude
that “the capacities for spatial integration rely heavily on specific types of
actors such as enterprises and voluntary organisations rather than on the
politico-administrative institutions”. This further strengthens the argu-
ment presented here regarding Finnish circumstances, that the position of
both the local and national authorities need to be reconsidered in order to
favour regional development processes. Governance processes, as the one
depicted in Article 2, easily become a show for the galleries rather than
actual bottom-up processes for decision-making.
Article 4 introduces the concept Quadruple Helix Intermediate
Organisation, a hybrid organisation gathering stakeholders, users, civic
organisations, public administration and politicians in order to generate
development through innovations for the sake of the local community.
This is a model where local communities play along with the game of
the post-Fordist economy rather than merely wait for its effects. During
recent years, the Finnish state authorities have strengthened the control
of R&D funding, for instance through the termination of the OSKE pro-
gramme, and consequently, the activity of every locality in this field is
increasingly determined centrally. This is an example of a kind of steering
through financing beyond the soft steering mechanisms described in the
metagovernance literature. The technology development centre KETEK
emerged owing strongly to EU and OSKE funding, and such possibilities
have certainly been reduced under current policies.

Looking at Articles 3 and 4 together, these illustrate the merit of

connectedness, of facilitating continuous interaction, a creative “people
climate” and the possibilities of reaching agreements for pulling together
rather than attempting to outperform each other. Moreover, these two
articles point out the value of constructing participative arenas according
to functional needs rather than static decision-making bodies. Together, the
findings of all four articles define the essence of the reinvented Third Way
by suggesting that the task assigned to politics, the governance of the post-
Fordist economy, is still highly important, and specifically, that the globalised
economy should find its governance in local and regional circumstances.

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Conclusions: Politics in the Post-Fordist


Consequent to the 1968 protest movements and the resource crisis, the
1970s was a time when “capital owners and economic leaders” realised
that it was becoming increasingly difficult to maintain a high growth rate
in order to support the welfare society, and consequently, a liberation of
the economy from the bureaucratic political system was needed (Streeck
2013: 44–45). In retrospect, the success of this neoliberal ideology is
astounding, perhaps amplified by the end of abundant natural resources
and the lifespan of the technologies of the second industrial revolution.
Now, we see suggestions of regulations of the market, which is precisely
what Karl Polanyi implied is the inevitable result of “the commodification
of labour and nature”. Subsequent to the financial crisis, which started in
the USA in 2008, the relation between politics and the economy has been
at the top of the agenda for economic scholars, who have increasingly
started to question the virtue of “hyperglobalisation” and open markets,
a paradigm implying economic integration and less room for differences
in social and economic structures between nations, and consequently, less
room for national, regional and local decision-making. Neoliberal dis-
course had reached an almost hegemonic status over the course of the
last three decades, becoming “the dominant political form of capitalist
globalisation” (Brenner and Theodore 2002: 350 cited in Castles et  al.

© The Author(s) 2017 85

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Palgrave Studies in Democracy, Innovation, and Entrepreneurship
for Growth, DOI 10.1007/978-3-319-40633-6_4

2011: 11), and this status has thus increasingly been contested, mainly
with arguments of equality and democracy.
In his book Gekaufte Zeit (Streeck 2013, German original in 2012),
Wolfgang Streeck identifies the beginning of the 1970s as a turning point,
when what he calls the tax state turned into the debt state. To instan-
tiate the democratic difficulty of the debt state, Streeck points out the
diminishing position of citizens on behalf of financial creditors consequent
to the rise of state debts after the 2008 crisis, comparing the relation
between citizens and creditors to that between workers and shareholders
at a company (Streeck 2013: 96–97). Streeck believes that the envy and
hate between nations displayed during the euro crisis have proved that the
heterogeneity of Europe rules out the possibilities for a political union in
Europe, with one-size-fits-all solutions similar to the hyperglobalisation
standards, ignoring the specificities of not only localities, but also nation-
alities (Streeck 2013: 198–205).
Thomas Piketty and his book Capital in the 21st Century (2013) has
recently received a huge amount of attention, mainly since the central
argument of the book, that wealth tends to accumulate more wealth is in
contradiction to the established opinion among economists that wealth is
earned through hard work. Through extensive series of longitudinal taxa-
tion data, Piketty is able to show that the period subsequent to the Second
World War up until the oil crisis in the 1970s was an unprecedented period
of equality, due to the fact that the economy, and thus wages, grew faster
than interest rates, alleviating efforts to improve this equality. Following
this time period, in accordance to the theory of Piketty, inequality has
grown and is currently on a par with la Belle Époque prior to the First
World War, with an incredible rise of wealth for the richest 1 %. Piketty
argues that rising inequality is an inescapable consequence of capitalism
and economic liberalism, and that this inequality spiral may break only
momentarily, as in the post-war period or by a change of policy, and conse-
quently, Piketty advocates for a global system of progressive wealth taxes.
Erik Brynjolfsson and Andrew McAfee on the other hand see “expo-
nential, digital, and combinatorial change in the technology that under-
girds the economic system” as the main reason for the increased inequality
during the last four decades (Brynjolfsson and MacAfee 2014: 133). In
their book The Second Machine Age Brynjolfsson & MacAfee identify an
exponential rise of digital technologies automating jobs, handing capital
owners and innovators an increasing share of productivity. Brynjolfsson
& MacAfee advocate political steering for maintaining equality, if not

for the sake of justice, then for the fact that equal opportunities are the
best growing ground for innovations (Brynjolfsson and MacAfee 2014:
Rodrik (2011) implies that economic globalisation and democracy are
even contradictory occurrences, and that for a society to be democratic,
governance of the market is required. As Rodrik explains (2011: xix), we
have few options here. A global political community governing the world
economy is difficult to realise, since such a setup would require extremely
complex accountability mechanisms. Instead, Rodrik pins his hopes to re-
empowering national governance, calling attention to the successful eco-
nomic development in China and India, states certainly not corresponding
to democratic ideals, but still demonstrating how strong state governance
may act to diversify the economy also under the pressure of globalisation.
In comparison, Rodrik points out the weak financial growth of the Latin
American countries, states applying much less governance of their econo-
mies. Thereby, in order to overcome the incompatibility of free markets
and governance, Rodrik first points out that the market and the govern-
ment should not be regarded as substitutes, but as complements to each
other. In this view, markets work best with the aid of governance, not
without it. Second, Rodrik emphasises the potential diversity in capitalist
models, adjusted to national characteristics with different setups of social
welfare, labour markets, corporate governance etc. Thus, what Rodrik
suggests is national governance adapted to different national circum-
stances, expecting such a setup to allow for healthier globalisation rather
than obstructing globalisation altogether.
The Bretton Woods compromise of 1945 allowed the Fordist states to
develop separate economic policies, with, for instance, their own versions
of welfare, while at the same time enabling global trade. In this system, the
impact of politics was definite. As a consequence of an increasingly mobile
capital, together with the resource crisis in the 1970s, the Bretton Woods
system became difficult to maintain, and since its abolishment, politics has
struggled to define its role in the globalised, post-Fordist economy. The
argumentation of the above-mentioned theorists, suggesting increased
governance of the economy, is in line with the reasoning of this study,
i.e. with its main objective of defining the role of politics in the contem-
porary economy. While Rodrik leaves the governance of the economy to
the level of nation-states, we here suggest decentralising politics to local

To summarise, the line of reasoning in this study has consisted of the

challenge of (1) the third industrial revolution initiating globalisation and
opening nation-states “upwards, downwards and outwards”, as described
by Jessop, and (2) the impact of knowledge on human behaviour, forming
increasingly reflexive and individualised citizens. On an individual level,
citizens construct their identities in a fluent fashion, disregarding tradi-
tional districts or regional borders. In this manner, the people and civil
society, as well as companies and the economy, act increasingly in func-
tional networks rather than static ones. The theoretical discussion pre-
sented here has dealt with the responses to this increasingly pluricentric,
reflexive and flexible society. First, we have seen the response of the exist-
ing liberal democratic system, which has allowed for different kinds of par-
ticipative platforms, acting outside of the representative system. We have
also seen suggestions from governance scholars of a system of metagover-
nance, implying tools for the use of the representative system to impose
control over these governance networks. Second, we have witnessed more
radical suggestions of post-liberal theorists, advocating an extensive rede-
sign of the democratic model. Again, it is important to note that the aim
of this study is not to create a functional democratic model by judging or
selecting one of these responses over the other, rather I suggest a new way
of comprehending the role of politics in the post-Fordist economy, and
the case studies presented in the articles aid this comprehension.
To compromise the simple and well-ordered representative model of
democracy certainly stirs things up. One main aim of this study has been to
explain and illuminate the long-term processes leading up to the existence
of governance networks today, facts implying that the simplicity of the
representative model is not sufficient to the pluricentric and post-Fordist
society. Another aim has been to point out the possibilities governance
networks offer, suggesting a pragmatic response to these networks rather
than merely addressing democratic deficiencies. This study and its empiri-
cal cases suggest that decreased top-down steering and decentralisation
of power may be an advantageous response to the megatrends described.
Democratic difficulties are, of course, obvious in a world of governance
networks: accountability suffers when elected politicians and public offi-
cials do not have a direct oversight of the governance process, conflicts
of interests and the protection of the citizens against the state are unad-
dressed issues, publicity and transparency are undermined by the fragmen-
tation of the policy process and the risk of resourceful actors dominating
the process is apparent. Addressing these democratic issues has been at

the top of the agenda for governance theorists during recent years. Some
scholars want to increase the control of governance networks, making
them dependent of government bodies. The concept of metagovernance
offers a wide range of tools, implying the steering of governance networks
to varying lengths. If and when these tools are chosen and applied, the
virtues of the new forms of conduct described in this study must be con-
sidered, especially the opportunity for adaptation of decisions to local cir-
cumstances, the activation of civil society and the promotion of a vibrant,
connected and innovative community.
These are delicate qualities easily deteriorated if control is too tight—
accordingly, prudence is required when metagovernance tools are selected
and exercised, and the set of tools chosen must certainly also be specific
to the particular context. New participative digital forums might also be
of aid in the future. In line with the suggestions of Peters (2010) above,
“storytelling” (see Bevir 2009: 132) might be the most efficient and pros-
perous metagovernance tool, that is, the fostering of beliefs, trust and
values creating coherent social and political meanings and identities. In
the cases studied here, the governing tools are certainly too tight to cor-
respond to the metagovernance ideals. At the other end of the spectrum,
more radical post-liberal democratic theorists believe that the participa-
tion of stakeholders, the transparency of their activities, the adaptation
to local circumstances and the illumination of local opinions this gener-
ates is sufficient for achieving legitimacy for decision-making processes.
In the Finnish case, to correspond to these ideals, we would need to see
a considerable withdrawal of state government control on behalf of the
strengthened regional units. As mentioned earlier, there are no scientific
arguments selecting the state-centric metagovernance response over more
radical post-liberal responses, or the other way around. People are the
ones responding to changing circumstances, and therefore, this is funda-
mentally a political matter.
Instances highlighted in this study suggest that we are currently in a
period of transition, where the society systems created in the wake of the
second industrial revolution are outdated and need to be adjusted to the
globalised, digitised reality in order to stay relevant and legitimate. Whilst
equality decreases in Western countries, discontent with the political sys-
tem rises and populist movements gain momentum. A return to an econ-
omy subordinated to democratic control along the lines of the Keynesian
model implies, to some extent, a restoration of enclosed national econo-
mies, and in accordance, a reversion of globalisation. Disregarding both

the virtues and drawbacks of globalisation, people as well as technology

now operate on a global arena, and consequently, history may not be
reversed in this case either. The suggestion put forward here is that in
order to find an arena for governance of the economy in a globalised
world, we need to look at localities. The broad outlines of the changing
economic and political circumstances during the last century, as well as the
case studies, have been described in this study specifically in order to dem-
onstrate the great potential hidden in participative, functionally designed
local and regional arenas.

Bevir, Mark. (2009). Key Concepts in Governance, Sage Publications, Los Angeles.
Brynjolfsson, E., & MacAfee, A. (2014). The second machine age – Work, progress,
and prosperity in a time of brilliant technologies. New  York: W.  W. Norton
Castles, S., Arias Cubas, M., Kim, C., Koleth, E., Ozkul, D., Williamson, R.
(2011). Karl Polanyi’s great transformation as a framework for understanding
neo-liberal globalisation. Social Transformation and International Migration in
the 21st Century, Working Paper 1, The University of Sidney.
Peters, G. (2010). Meta-governance and public management. In S.  Osborne
(Ed.), The new public governance? Emerging perspectives on the theory and prac-
tice of public governance. New York: Routledge.
Rodrik, D. (2011). Globalization paradox: Why global markets, states, and democ-
racy can’t coexist. Oxford: Oxford University Press.
Streeck, W. (2013). Köpt tid. Den demokratiska kapitalismens uppskjutna kris.
Berlin: Suhrkamp Verlag.

Attempts at Regional Mobilisation

in a Unitary State: Two Decades of Learning
and Unlearning

Two decades ago, the regional approach of the EU gave rise to calls for a
“Europe of regions” and a significantly diminished position for national
governments in the near future. Indeed, the principle of subsidiarity is
fundamental to the functioning of the EU, raising the importance of
regional self-government, but the position of the nation-states has proved
to be stronger than estimated in the 1990s. Of course, the regionalisa-
tion agenda of the EU is part of a broader shift of thought, also in aca-
demics, initiated by megatrends such as globalisation. Still, concerning
unitary states, the regional agenda of the EU has been viewed as a game
changer, handing an opportunity for regions to mobilise for the sake of
their own development. Two decades have now passed since Finland, one
of the truly centralised countries in Europe, joined the EU, and during
this time we have witnessed regionalisation reforms and consecutive back-
lashes. This inconsistent development generates the main question of this
chapter: is it possible for a unitary state to “learn” regional mobilisation?
The possibilities for mobilising locally or regionally may be compre-
hended as community-led bottom-up processes. However, such processes
can also merely be seen as the self-government of local or regional authori-
ties in opposition to state top-down steering. Although this is a matter

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Palgrave Studies in Democracy, Innovation, and Entrepreneurship
for Growth, DOI 10.1007/978-3-319-40633-6_5

concerning the legitimacy of decisions, when dealing with issues of decen-

tralisation, the question of what regional mobilisation is and what may be
regarded as real bottom-up processes must be posed. Although Finland
has traditionally been a unitary state, civic movements grew strong at the
end of the nineteenth century, especially through youth movements and
unions, handling a range of tasks for the benefit of the whole society. With
the emergence of the welfare society following the Second World War, the
tasks of the civic movements were taken over by the government step by
step, and along with the massive population movements through urban-
isation processes, the civic movements lost momentum (Metsämäki and
Nisula 2006). These traditional civic movements, once handling a range of
tasks, may be considered as genuine bottom-up-processes, where ordinary
citizens observed their needs and engaged in responding to them. Has the
regionalisation turn in the 1990s given rise to a similar gain in terms of
civic engagement?
Since the 1990s, Finland has adapted to the regional approach of
the EU by constructing a regional level pretty much from scratch. This
chapter describes the evolvement of the new regions in Finland over two
decades, starting in the early 1990s, when a wave of regional reforms
reduced state involvement and constructed new regional authorities, and
during the 2000s when a second wave of reforms further institutionalised
the regional units. Additionally, the influences of European and Finnish
national development programmes on the possibilities for regional mobil-
isation have been apparent and somewhat inconsistent. Project policy
programmes and development policy programmes constitute empiri-
cal evidence regarding regional opportunities for regional mobilisation,
while interviews with regional key actors in the region of Ostrobothnia
in the west of Finland, as well as with actors at the state and European
level, offer de facto evidence of these opportunities. First, a theoretical
chapter will investigate the possible definitions of the concept of regional


In order to elaborate on the concept of regional mobilisation, theories of
decentralisation, Multilevel Governance (MLG), SRA and regionalism will
be discussed.

5.2.1 Decentralisation
Starting in the 1980s, at the end of the era of the Keynesian welfare
state, power of influence has been decentralised to subnational govern-
ments pretty much all over the world with the hope of meeting the diverse
demands of the post-Fordist world. Decentralisation has broadly been per-
ceived as a virtue and a solution to an increasingly individualistic and plu-
ricentric society, where citizens raise their demands on public services, and
due to increasing flows of knowledge induced by processes of urbanisation
and globalisation, these demands are also becoming increasingly heteroge-
neous. Additionally, globalisation has altered the scope of action of states,
and at the same time, the appreciation of politics, of politicians and of vot-
ing has dropped significantly beginning in the 1970s (Saito 2011: 486).
By decentralising, these issues are addressed, as its advocates proclaim,
offering advantages of both democratisation and economic development.
Citizens receive the opportunity to participate in  local decision-making
processes, and at the same time, as public service becomes more responsive
to the needs of citizens, the efficiency of general welfare is improved (Saito
2011: 484). Furthermore, economic advantages are expected since decen-
tralisation is also appreciated as beneficial for innovation, as explained
by economic concepts such as clusters (Porter 1990), industrial districts
(Becattini 1990; Brusco 1990), innovative milieux (Camagni 1991) and
learning regions (Asheim 1996). Accordingly, two types of advocates of
decentralisation are distinguishable, with the political right (neoliberalists)
emphasising the importance of markets, small governments and private
service providers and the political left appreciating efficiency and the dem-
ocratic benefits of increased participation (Saito 2011: 490).
Looking at theoretical and empirical assumptions of the merits of
decentralisation, Saito (2011) concludes that both theoretical arguments
and empirical findings are contradictory, that the same rationales are used
by both supporters and opponents of decentralisation. Supporters point
out the “information advantage” of decentralisation, the benefit of tailor-
made solutions according to the specificities of every locality, at the same
time as, say, the relation between taxes and services becomes more obvious
for citizens. Opponents on the other hand claim that local actors do not
necessarily have better knowledge of different issues, and if that is the
case, the increased need for central coordination paradoxically creates a
larger rather than a smaller central government (Saito 2011: 487–488).
Supporters view increased participation as a method for counteracting

social isolation and exclusion; i.e. civil values are circulated when localities
become “schools of democracy” and corruption is obstructed when infor-
mation of decisions is more easily disseminated and the distance between
decision-makers and the people shrinks. On the other hand, opponents
fear the increasing influence of the locally powerful and a consequential
“elite capture problem” when power is decentralised. Moreover, support-
ers see opportunities for less bureaucracy and an altogether smaller and
more efficient public sector owing to improved interoffice coordination
by local authorities, while opponents claim skills and knowledge are inad-
equate at the local level, advocating instead for a national “economy of
scale” (Saito 2011: 490).
This theoretical ambivalence is also visible in empirical studies examin-
ing both the economic and democratic effects of decentralisation, and
accordingly, Saito points out quantitative studies displaying decentralisa-
tion as both beneficial and disadvantageous (Saito 2011: 492–493). As
a result of these contradictions, a second generation of decentralisation
theory has emerged, moving away from the normative assumptions to a
realistic evaluation of the difficulties of implementing an agenda of decen-
tralisation. Here, decentralisation is comprehended as a continuous pro-
cess with the aim of finding a model of power distribution suitable to every
country, every geography and every point in history, paying attention to
the complex political and socio-economic relations between national and
subnational governments. Thereby, quantitative analyses are inappropriate
to use since they only pay attention to the level of decentralisation and
ignore the manner in which the influence is used on and between levels of
government. Saito concludes that decentralisation is not an end in itself,
since moving decision-making power closer to the people does not result
in democratic governance unless it is implemented together with political,
economic and social reforms (Saito 2011: 494–496).

5.2.2 Multilevel Governance and the Strategic Relational

One of the most important promoters of decentralisation in the world
during the last decades has of course been the EU. When looking at the
EU and the role of regions, it is impossible to overlook MLG, a concept
suggested as “the most omnipresent and acceptable label one can stick on
the contemporary EU” (Schmitter 2004: 39 in Bache 2012: 630). MLG
is commonly described as a “set of interactions that occur between policy

actors across more than one level of government” (Bevir 2009: 134). The
multilevel component of the concept corresponds to well-defined verti-
cal power relationships and non-overlapping jurisdictions with the spe-
cific authority handling a bundle of tasks. The governance component on
the other hand corresponds to task-specific actions, more complex and
fluid functional agencies and partnerships, without jurisdictions and with
a shrinking or expanding scope of action according to what the policy
at hand demands. The multilevel component again implies intergovern-
mental relations, that state competences have slipped away either upwards
or downwards, while the governance component suggests an increasing
role of non-governmental actors in policymaking (Bevir 2009: 134; Bache
2012: 630).
Regarding the EU, the renewed push for integration in the form of
the Single European Act in 1986, eliminating national veto in a num-
ber of areas, as well as the introduction of the principles of partnership
and additionality in the Structural Funds in 1988, largely formed the fun-
dament for the MLG practice of the Union (although additionality was
introduced in 1975, it had largely been ignored until 1988). The part-
nership principle demanded partnerships between national, subnational
and supra-national actors, giving subnational actors a formal role in EU
policymaking, thereby emphasising the multilevel aspect of MLG. Soon
afterwards, non-state-actors were obliged to participate in partnerships,
reinforcing the governance aspect of MLG (Bache 2012: 628–629).
Through its principle of subsidiarity, the Union has put all its bets on the
regions and bottom-up development, advocating the virtues of proximity,
but this has also been described as “the strategy left for the EU compet-
ing for political and administrative space in a Europe dominated by well-
entrenched nation states” (Andersson et al. 2012: 302). This strategy was
strengthened through the additionality principle, which required that EU
funds should be spent in addition to any planned state expenditure, and in
practice the principle implied direct cooperation between the regions and
the EU, circumventing the nation-state and allowing the region to make
use of the structural funds at its own preferences (Bache 2012: 629).
In accordance with the literature of MLG, decentralisation in Europe
is first and foremost a consequence of the cohesion policy of the EU and
its structural funds. By investigating the introduction of these funds in
the eight Eastern European member states enacted in 2004, Bachtler and
McMaster (2008) conclude that several obstacles exist for the Structural
Funds Programme and its possibilities for empowering regions. For

instance, while EU legislation cannot force member states to decentralise,

the general influence of the funds is limited to only a few policy areas.
Subnational empowerment is dependent on national institutional struc-
tures and constitutional features, and thus, looking at unitary states, the
introduction of “regions” may merely have been “pragmatic responses to
the administrative demands of Structural Funds”, and at the same time
“centralised sectoral policy making was adopted as a more robust plat-
form from which to develop and deliver EU programmes” (Bachtler and
McMaster 2008: 25). Hughes et  al. (2004: 543), also investigating the
eastward enlargement, similarly conclude that domestic political factors
and considerations were the most significant factors influencing the setup
of a regional structure according to the requirements of the Structural
Funds Programme. Some countries drew from territorial identities,
while for instance the small Baltic States and Slovenia, with little func-
tional need for regional governance, kept their centralised systems. Some
countries revived communist era planning regions while others used their
pre-communist territorial self-government experiences of the Habsburg
Empire. In the Czech Republic, a regional reform was blocked for several
years due to an ideological centre-regional polarisation. These different
institutional outcomes Hughes et al. (2004: 547) trace back to the thin
character of the regulatory framework of EU regional policy. Additionally,
actual regional participation is easily limited, since many state governments
dominate the planning stages of the funds programme, due to both resis-
tance to enabling regional input as well as a lack of capacity at the regional
level to get involved (Bachtler and McMaster 2008: 25). Bachtler and
McMaster (2008: 26) observe that since managing the structural funds is
demanding, successful implementation of them “depends less on regional
government than on professional management” (Bachtler and McMaster
2008: 26), and thus, “decentralization and capacity building to absorb
post-accession funding need to go hand-in-hand … centralized structural
fund programming and management may be needed to ensure the effec-
tive implementation of priority programmes” (Marinov et  al. 2006: 6).
In conclusion, there is no guarantee that the Structural Funds contribute
to stronger regions, since this is dependent on the manner in which the
national state structures allow for regions with the capacity for managing
the funds and regional development. However, Bachtler and McMaster
(2008: 26) conclude that in situations where regions are weak and there is
a lack of domestic regional policy funding, the Structural Funds may sup-
port regional engagement in development initiatives.

SRA is relevant when discussing the learning capability of the state, as

in the case of the influence of the Structural Funds on the nation-states
depicted above (Jessop 2008). SRA describes the strategy shared by an
alliance of actors controlling every particular state, and this strategy is
deeply rooted in the history of the state and its institutions. These alliances
between actors such as political parties, large companies, interest groups
and civil society organisations keep the strategies in place and form a kind
of path dependency for the development of the state. What is interest-
ing in this context is that these structural strategies evolve over time and
act as selection mechanisms approving or denying suggestions of change.
However, at certain points in time these structures are open to change,
since “agents are reflexive, capable of reformulating their own identities
and interests within certain limits, and able to engage in strategic calcula-
tions about their current situation” (Jessop 2008: 41). In other words,
actors are open to the possibility of change and this is what constitutes the
basis for the learning capability of states.

5.2.3 Regionalism
In order to describe the visible trend of decentralisation and empower-
ment of regions in Europe, the concept of “new regionalism” was intro-
duced in the 1990s (see e.g. Keating 1998; Fitjar 2009). Regionalism
includes regional identity as an important factor for regional mobilisa-
tion, where identity is interpreted as either the driving force for demand-
ing increased autonomy, or merely as a product of the decentralisation of
decision-making authority. As Fitjar put it, regionalism is “the politiciza-
tion of regional identity”, while the notion that “the regional popula-
tion has a set of common interests leads in many cases to the conclusion
that these interests could be more effectively advanced if the region were
allowed more autonomy on internal matters” (Fitjar 2009: 5). Thus, the
understanding of regional identity in the regionalism debate in the 1990s
referred to “natural and cultural features associated with given bounded
spaces or to the identification of people with such entities”, and regional
identity has accordingly been regarded as “vital in planning and market-
ing as a means of mobilising human resources and strengthening regional
competitiveness” (Paasi 2012: 1207; see also Paasi 2001). Recently, the
bounded characteristic of regional identity has been criticised since identi-
ties “should be seen in relational terms as multiple and fluid because iden-
tities are increasingly associated with mobility, networks and interactions

occurring in ‘soft spaces’ and across ‘fuzzy boundaries’” (Paasi 2012:

1207). Paasi (2012: 1216) identifies a discrepancy between the relational
and functional identities related to MLG and regional administrative prac-
tices, as for instance in regional planning, where regional identity referring
to the specific territory is enforced, since only actors from the specific ter-
ritory are allowed to participate. This, Paasi concludes, is in opposition to
the fact that regional identity is only one of many identities people have,
and that those not living in the region might as well have a stake in it.
Therefore, new regionalism and its preference for uniform unitary regions
might not be to its advantage in all cases.
As a consequence of the identification of the “fuzziness” of regions
(see Herrschel and Tallberg 2011), a new “post” regionalism (Sjöblom
and Andersson 2016) has been suggested, acknowledging the importance
of functional regions rather than territorial ones. Basically, this develop-
ment is caused by the economic pressures of globalisation mentioned ear-
lier, and of the state consequently acting in a different manner. This has
been described as a transition from geopolitical to geoeconomic practices of
the state government (Cowen and Smith 2009; Moisio and Paasi 2013),
referring to states seeking to accumulate wealth through market control
rather than through the acquisition and control of territory, in other
words, states acting in the market arena rather than using governmental
techniques, as for instance expanding welfare rights, in order to produce
wealth (Moisio and Paasi 2013: 268). In this way, geoeconomics involves
space-making strategies aimed at creating innovative centres of growth by
supporting higher education organisations and research networks, mainly
in city-regions, in order to maintain the international competitiveness of
the state. In other words, the rationale of the state has altered from focus-
ing on the development of the national territory to the development of
selected growth poles in the form of city-regions, which are expected
to prepare the state for global competition. Thus, also local actors are
spurred to flexibility and functionality, which are what post-regionalism
actually responds to, meaning that spatiality is no longer the only rel-
evant organising parameter. Instead, connectivity and linkages through
networks of actors are increasingly relevant, with actors temporarily shar-
ing policy objectives (Herrschel 2011: 87) and “seeking to ‘gang up’
to improve their joint prospects” (Herrschel and Tallberg 2011: 10). In
this reasoning, it is “the number of connections that produces influence,
power and relevance” (Herrschel 2011: 95 referring to Couldry 2006).
Here, “soft infrastructures”, such as skills, expertise, attitudes, image and

economic structure are decisive for these functional regions to work, and
consequently, region building today is increasingly about facilitating such
factors, “making people and institutions communicate, work together,
trust each other and become part of functional networks” (Herrschel
2011: 96). The increasing importance of participating in such functional
networks is the cause of a new kind of periphery, where some sections of
spaces are preferred and other are bypassed. Regions, just like territories,
are in this way divided, typically by city-regions creating dynamic net-
works together with partner cities, leaving the surrounding and spatially
close areas on the outside (Herrschel 2011: 98). Looking at the role of
the government, arranging administration according to functional spaces
is of course not practicable. Governance cannot be only “flexible, vir-
tual and immediate”, since “clear lines of responsibility, especially when it
comes to finances, legitimacy and power allocation” need to exist as well
(Herrschel 2009: 274). Two lessons may be learned of this reasoning:
(1) The decline of regional equalisation policy, which basically regarded
regions as territories, has left way for the rise of functional regions, where
regional centres form cross-regional networks and where areas in the vicin-
ity may remain neglected, (2) the accountability mechanisms of the rep-
resentative democratic system is based on territories and is consequently
confused when activities increasingly gravitate towards functional regions.

5.2.4 What Is Regional Mobilisation?

Following the theoretical discussion above, the concept of regional mobil-
isation may be distinguished not merely as the decentralisation of influ-
ence and the possibility for subnational authorities to take and implement
decisions, but as the possibilities for social movements and the whole of
local societies to participate and influence decision-making. As discussed
above, the manner in which power is decentralised is decisive, i.e. that
transparency and the possibilities for local influence are present in order
to achieve the democratic and efficiency objectives of decentralisation.
Also, transparent interactions within regions and between networks and
government levels are essential. Based on the discussion of the rise of
functional regions, there is also a need to maintain an awareness of the
new peripheries, the unfortunate areas outside the influence of the city-
regions. When influence is decentralised and regional equalisation policies
are played down, these communities are put to the test. In accordance
to the theoretical discussion above, these regions also need functioning,

inclusive, engaging and networking institutions. In conclusion, regional

mobilisation should not only correspond to the decentralisation of power
to regional or local authorities—some sort of civic engagement is also



A common classification of the decentralisation of nation-states is whether

countries are federal or unitary, or somewhere in between. In countries
such as France, Italy, Spain and Poland, the sovereignty of the national
parliament is not absolute, but in some respect displays similarities of fed-
eral countries. Finland, on the other hand, has always been classified as
a unitary country, although the position of the regions in Finland has
been viewed as strengthened due to EU accession in the 1990s (Karvonen
2003). Instead, although the legislatively strong but small municipalities
maintain complete responsibility for all municipal tasks, they have had the
opportunity to construct joint municipal organisations when the popula-
tion base has been too small (see Prättälä 2012); in this way a regional
level has formed on the basis of municipal cooperation.
The Assembly of European Regions (AER) defines regions as “the terri-
torial body of public law established at the level immediately below that of
the state and endowed with political self-government”, and “the region’s
basic structure shall comprise a representative assembly and an execu-
tive body”(AER 1996: 4). In this regard, the Finnish Regional Councils,
with their indirectly elected assemblies, are exceptions in Europe, both as
members of the AER and as recipients of Structural Funds. When study-
ing MLG, Finland is an interesting case, since strong municipalities and a
traditionally weak regional level have served as prerequisites for munici-
pal competition rather than cooperation, and localism instead of political
regionalism (Virkkala 2008: 129). These circumstances have resulted in
a strong presence of actors outside the politico-administrative system in
regional development in Finland, and as a consequence of this kind of
setup, researchers have identified difficulties of transparency, accountabil-
ity and in the division of tasks (Virkkala 2008: 119). At the same time,
both the multilevel and the governance aspects of MLG are certainly
present in Finland. Following the narrative of MLG and post-regionalism
above, functional and boundless governance networks operate on multiple
territorial levels and are thereby expected to capture variations in the reach

of policy externalities where regionally restricted networks are not (Bache

2012: 637). Looking at the possibilities for regional mobilisation, both
functional and territorial regions are made use of in Finland. As we shall
see, we have witnessed both the decentralisation of authority and develop-
ment funding, national and European, which have affected the possibili-
ties for regional mobilisation.

5.3.1 Regional Administration Reforms in the 1990s

The beginning of the 1990s may be regarded as a period of transition in
Finnish public administration. The traditional Weberian model of admin-
istration, with its characteristic hierarchical bureaucracy, was considered
out-of-date and New Public Management emerged as a major influence
when public administration was being reconsidered. Decentralisation, goal
management and competition were methods expected to improve the effi-
ciency of the administration (see Temmes 2006). Concurrently, EU mem-
bership became topical, and as a consequence of the union’s method of
redistribution targeted at regional entities through the Structural Funds,
a new regional recipient institution was required in Finland. The Regional
Councils, elected indirectly by the municipalities, acquired the responsi-
bility for regional development. The EU Structural Funds were then chan-
nelled through the new Employment and Economic Development centres
(TE-centres), which were directly subordinated to three ministries, while
the Ministry of the Environment set up the Regional Environmental
Centres. Although the reforms decentralised authority from the state
to the regions, the ministries’ control over their policy sectors was still
The structure of regional administration that transpired, with the respon-
sibility for regional planning placed on the locally based Regional Councils
and the financial resources entrusted to the state-based TE-centres, meant
that intense cooperation and networking were required, and consequently,
the regional administration structure in Finland was far from uniform after
the restructuring in the 1990s. This was because the Regional Councils,
the TE-centres and the Regional Environmental Centres all governed
different territories. For instance, in the western part of Finland where
Ostrobothnia is situated, two TE-centres covered three Councils, while
the corresponding Environmental Centre covered also a third Council.
On top of this, the Provincial Office of Western Finland covered seven
Regional Councils.

Furthermore, it was considered beneficial to invite the second and

third sectors to participate in the planning of the regional development.
Networks and cooperation groups emerged as a result of this, where state,
municipal and business participants were represented. For instance, a long-
term Regional Scheme and a Regional Development Programme imple-
menting the Scheme should, according to the Regional Development Act
of 2002 (updated in 2009), be prepared “in cooperation with state insti-
tutions, municipalities and other associations and organisations that take
part in regional development” (1651/2009 §25). The Regional Council
received responsibility to prepare these programmes, as well as an annual
Regional Development Plan implementing the development programme.
This plan is written by the Regional Management Committee (RMC),
which assembles equal representatives from the state, regional and pri-
vate sectors, thereby serving as a good example of intensified cooperation
between different society sectors.

5.3.2 Regional Development Programmes in the 1990s

and 2000s
The Structural Funds consisted of the ERDF and the ESF, and focused
on supporting enterprises, improving employment and general regional
development. The funds channelled financial resources through regional
development projects, which demanded partnership between all society
sectors. Still during the 2000–2006 period, the Structural Funds adjusted
their financing according to different levels of objective areas, i.e. poorer
regions received a larger amount of aid. For instance, Ostrobothnia was
partly covered by Objective 2 funding, aimed at regions close to the
Community average, while still facing different socio-economic problems.
During the 1990s, general rural development was advocated alongside
agricultural support in the Common Agriculture Policy (CAP) as issues of
the environment, which meant that the use of land and territory, as well
as the economic, social and cultural development of rural areas, became
increasingly topical (Vihinen 2003: 52–60; European Commission
2012a). Through the Agenda 2000 reform agreed upon in 1999, the
strengthening of the second pillar of CAP meant that EU rural funding
not only concentrated on supporting farming, but increasingly encour-
aged the development of alternative rural industries. The result was an
intensification of project-based financing in rural areas. The LEADER pro-
gramme (piloted in 1991 and mainstreamed in 1995) activated LAGs and
in this manner complemented the Structural Funds. LAGs bring together

active citizens and state administration, municipalities, NGOs and private

enterprises and deliver an excellent example of intensified cooperation
between different society sectors (Ministry of Agriculture and Forestry
2006). To compensate areas left outside EU funding, LEADER was
complemented by the POMO programme (Rural Programme Based on
Local Initiative) in Finland. For instance, the Ostrobothnian LAG Aktion
Ostrobothnia received funding from this complementary programme.
Another state-funded development programme was The Western Finland
Rural Development Programme (ALMA), which was an EU/Finnish
rural development programme for areas outside Objective 1. Together
with the Objective 2 funding, ALMA prioritised developing the entrepre-
neurial culture of the region, developing cooperation, consumer values
and environmental issues (Marsden et  al. 2004). The second pillar was
apparent in the ALMA programme through the aspect of its support for
the diversification of rural industries and the maintenance of the rural vil-
lage as an attractive place of residence. However, although the ALMA pro-
gramme brought about numerous village projects in the municipalities in
Ostrobothnia, the projects still lacked coordination between themselves.
The TE-centres negotiated directly with the municipalities concerning
each individual project application instead of first allowing the Regional
Council to coordinate the projects (Marsden et al. 2004).
Although ALMA emphasised rural areas, a study conducted by
Nordregio concluded that Finland at this time was the Nordic country
“with the most systematic approach to urban issues in regional and
national development strategies”, since the development programmes saw
“urban areas as the main targets” (Nordregio 2006: 59–60). This mainly
referred to the Regional Centre programme (AKO) and the OSKE. OSKE
was initiated in 1994, when regional knowledge centres were appointed
for the purpose of concentrating research units, universities, industry and
regional administration units around chosen technological specialisation
areas, specific to each region. AKO was introduced in 2001 for the pur-
pose of making regions more active on behalf of their own development.
Although the programme was controlled by the state government, regional
groups assembled representatives from municipalities, education systems
and industry. Both these national programmes were in proper accordance
with the Lisbon Agenda concerning regional specialisation and competi-
tion. However, OSKE and AKO only focused on regional urban centres
and thereby left out peripheral areas, and it was not until 2007 that this
was corrected by the introduction of a Regional Section for Rural Areas
(AMO) and supplementary Island Development Programmes.

5.3.3 Regional Development Programmes 2007–2013

Following the Eastern expansion in 2004, the EU inevitably needed to
alter the arrangement of the Structural Funds going into the 2007–13
period, since the regional inequality grew with the acceptation of new
membership countries. The previous objective areas were abolished, and
consequently all Finnish regions were collected under the same objec-
tive area for Regional competitiveness and employment. This reduced the
disparities in EU funding between different regions in Finland and, for
instance, abolished the Finnish LEADER complementary POMO pro-
gramme. The programme proposal for the Structural Funds for the pro-
gramme period 2007–13 especially emphasises that each region should
have a joint working table and work through joint strategies. Innovation
networks, know-how structures, accessibility and operating environment
are mentioned as important focus points in the funding strategy (Council
Regulation (EC) No 1260/1999; No 1083/2006).
In 2005, a single legal framework for financing the common agricultural
policy was introduced, and two new funds were created: the European
Agricultural Guarantee Fund (EAGF) and the European Agricultural
Fund for Rural Development (EAFRD). This meant that rural develop-
ment received a separate fund, and this consequently raised the importance
of developing sustainable rural areas. Generally, the Rural Development
Programme became more uniform with the new programme period start-
ing in 2007. A single programme with four axes, including the LEADER
approach, was introduced for the purpose of improving coordination and
reducing overlapping actions.
With consideration for the 2000–06 programme, the programme
for 2007–13 obligates every member country to compose a Rural
Development Programme. For the new period, even more emphasis was
put on the second pillar of rural development and LEADER became a
part of the general Rural Development Programme. The goal was to
achieve a simplification of rural development, and to collect rural devel-
opment within a framework of financing and project work (Europeiska
kommissionen 2006). A system of maintaining an official register was a
new component in the LEADER programme, complemented by a more
thorough evaluation, which was introduced in an attempt to determine
the socio-economic effects of the projects and the success of different
components in the projects. The LAG obtained the right to prepare
their own budget, instead of this being decided by the Employment and

Economic Development Centres, as was the case previously. The Ministry

of Agriculture and Forestry is responsible for the administration of the
Rural Development Programme. The financing systems that are included
in the programme are prepared by working groups elected by the ministry
with representatives from the involved stakeholder groups and the regional
administration. Finland became the first EU member forming a Network
for Rural Development in 2007. The network assembles all authorities
and organisations participating in rural development programmes. This
includes state authorities, local and regional authorities, private individu-
als, enterprises, associations and local action groups. The network collects
and spreads information, helps educate, favours cooperation and assists
in creating contacts both nationally and internationally. Additionally, an
Agency for rural affairs has been founded that supports the ELY-centres
and other organisations handling agricultural and rural funding.
In 2010, the Finnish national development programmes of AKO, AMO
and the Island Development Programme merged forming the Programme
for Cohesion and Competition (KOKO), while OSKE continued as a sep-
arate programme. KOKO carried on very much in line with the previous
programmes. The intention of merging the programmes was to achieve
even better regional cohesion, cooperation and network building. Special
emphasis was also placed on improving cooperation between regions and
between different government levels. The funding for this was divided
so that 50 % came from the Finnish government, while the remaining
50 % came from municipal co-funding (Ministry of Employment and the
Economy 2008). In January 2012, the KOKO programme was termi-
nated as a consequence of the financial crisis.

5.3.4 Regional Administration Reforms in the 2000s

The Reform Project for State Regional Administration (ALKU), imple-
mented in 2010, implied another radical restructuring of the regional
institutions. The overall aim of the project was to simplify the system of
state regional administration by reducing the number of authorities, and
to advance cooperation between state regional administration agencies and
the Regional Councils. “Enhancing the powers of Regional Councils as
coordinating and consolidating authority” (Ministry of Finance 2009: 12)
and “devolving executive duties and development responsibilities other
than those of nationwide significance to regional and local administration”

(Ministry of Finance 2009: 6) were targets expected to improve the pos-

sibilities for regional self-governance.
Looking at actual legislative alterations of the ALKU reform, two main
outcomes are visible. First, the powers of the Regional Councils to bring
together and coordinate regional development activities were increased.
The position of the Regional Programme was strengthened with an
explicit phrase stating that the programme should be the leading develop-
ment document for authorities (Regional Development Act, 1651/2009
§25). The implementation plan of the Regional Programme was also sup-
posed to be streamlined more closely to the performance steering pro-
cess between central administration and the regions (Ministry of Finance
2009). Four new tasks were assigned to the Regional Councils:
– prognostication of education and traffic planning
– preparation of an order of preference for local government and
other education proposals for projects
– promotion of joint service points in the region
– appointment of regional arts councils and sports councils
Secondly, six regional state administration units were replaced by two
new units: the ELY and the AVI (see Fig. 5.1). ELY resumed responsi-
bility for implementing and developing government activities, while AVI
held supervisory tasks.
During the same time period, the Project to Restructure Municipalities
and Services (PARAS) was launched to establish a sound structural and
financial basis for the services that municipalities were responsible for
in order to secure the organisation and provision of such services in the
future. The reform project was in effect from 2005 until January 2012.
Population boundaries were established for joint municipal boards (e.g.
20,000 for Social and health services) and the municipalities were given
the opportunity to prepare for the reform according to directives provided
by the state; no municipalities were forced to join together. The incentives
were future demographical and economic challenges, especially in rural
communities. In practice, the project brought about municipal mergers
and enlargements of joint service providing organisations. The result of
this was that the number of municipalities decreased from 416 to 315,
while many joint municipal boards were enlarged (Arbetsgruppen för
kommunalförvaltningens struktur 2012: 26).
In 2012, consecutive to PARAS, the Finnish government introduced
a new municipal reform package with the aim of reducing the number of

Fig. 5.1 Regional administration units before and after the Reform Project for
Regional Administration (ALKU)

municipalities to 66 (Arbetsgruppen för kommunalförvaltningens struk-

tur 2012: 198). This reform is closely connected to a social welfare and
healthcare reform, which will end in a merging of all healthcare districts
into five major joint municipal boards in the whole country. The necessity
of municipal mergers is consequently not as apparent, while a large part of
the decision-making authority of every municipality is taken away. Still, in
2014, the municipal reform was still under way.

In 2012, two years subsequent to the ALKU reform, the Ministry of

Finance conducted a survey among employees at the regional authorities
to determine the outcomes of the reform. According to the published
report (Finansministeriet 2012), the restructuring was largely successful
in the allocation of tasks between the new regional agencies. The report
noticeably states that the construction of multidisciplinary authorities has
been beneficial, with evidence of increased cooperation across adminis-
trative boundaries, which in the report is expected to give the specific
activities greater impact in the society (Finansministeriet 2012: 179, 188).
However, some tasks are yet shared between ELY and AVI, circumstances
that were evaluated as counterproductive. Additionally, the inconsis-
tent structure of the ELY-centres (9 centres with full competences, 15
with partial competences) suggests a further restructuring of these units
(Finansministeriet 2012: 176, 182).
Looking at the position of the Regional Council, the report notes that
the new tasks assigned to the Councils have been suitable to the organisa-
tion, and the tasks have enhanced the expertise of the Councils and their
position as a regional coordinator. Although the Regional Programme, on
the other hand, has received a stronger position in legislation, the report
concludes that in practice no content has been assigned to these regula-
tions. The actual alterations of the importance of the programme have
however not been possible to evaluate in the report (Finansministeriet
2012: 180–181).

5.3.5 The Programme Period 2014–2020, What is New?

In 2010, the European Commission published its Europe 2020 agenda
(European Commission 2010), a strategy emphasising smart, sustainable
and inclusive growth, themes which have dominated EU policy writing
and the funding period of 2014–2020. Coordination is a key theme of the
new period, and accordingly, each nation-state should develop a Common
Strategic Framework (CSF), for the ERDF, the ESF, the Cohesion Fund
(CF), the EAFRD and the European Maritime and Fisheries Fund (EMFF)
(European Commission 2012b). Due to an increased emphasis on cohe-
sion, the total amount of funding in Finland is expected to shrink by about
one-third, at the same time as the sparsely populated areas in the north and
east of Finland are prioritised (Arbets- och Näringsministeriet 2014: 57).
Furthermore, the CSF funds should be concentrated on “a limited num-
ber of priorities”, since “experience shows that thematic concentration

allows for an increase in effectiveness of public interventions by reaching

a critical mass with a real impact on the socio-economic situation of a
country and its regions” (European Commission 2012b: 8). In accor-
dance with the Europe 2020 strategy, with priorities such as “innovation
union”, “an industrial policy for the globalisation era” and “an agenda for
new skills and jobs”, the CSF funds should be concentrated on supporting
research and innovative development and not be used for infrastructure,
in order to improve economic competitiveness (European Commission
2010, 2012b). Again, northern and eastern Finland are exempted, while
the need for improving communication possibilities in these areas is vast.
With the Smart Specialisation Strategy (Smart Specialisation Platform
2012), describing a strategy for innovative development, the EU wants
to empower both central and peripheral regions by focusing on regional
resources. The strategy implies a “shift from a sectoral to a regional con-
text” and “the idea is that regional authorities can exploit the smart spe-
cialisation logic by undertaking a rigorous self-assessment of a region’s
knowledge assets, capabilities and competences and the key players
between whom knowledge is transferred” (McCann and Ortega-Argilés
2011: 1, 3).Thus, the aim is that the strategies for innovative development
should be based on present industries and a common regional interest
rather than visionary policymaking.
Another alteration on the account of Finland for the new round of
funding is found in the Commission position paper for Finland:

Finland is encouraged to reflect on how sound financial management could

be further enhanced by the application of simplification, better coordination
of Funds and programmes, and by cutting administrative costs and bur-
den for the beneficiaries … due to the large number of intermediate bodies
the internal guidance and management practices can vary relatively much
between different bodies and this poses challenges to the equal treatment of
possible beneficiaries. The concentration of interventions on a small number
of thematic objectives and specific investment priorities could be accompa-
nied by a smaller number of implementing bodies and a leaner administra-
tion. (European Commission 2012b: 27)

In an attempt to respond to this directive, the government of Finland

intended to transfer the responsibility for management and payment func-
tions of the CSF funds from the Regional Councils to the ELY-centres,
while the Regional Councils would merely have handled the search for

ideas and promotion of the funds, as described by a Senior Officer at the

Ministry of Employment and the Economy (Turkia 2013). Naturally, the
Regional Councils objected, and instead, in order to simplify the adminis-
tration of the funds and to enlarge the critical mass of each funding region,
the administration of the funds was concentrated to only 4 of the 15 ELY-
centres, in other words elevating this activity from the NUTS3 to NUTS2
level, greatly enlarging the areas of action (Finnish Government 2013: 13).
Yet a new component of the funding period is the introduction of
Community Led Local Development (CLLD), a concept with which the
Union wants to expand the LEADER strategy of engaging local actors. Thus,
local action groups are able to form outside of the LEADER programme
with funding from other CSF funds. This is not entirely a new approach
since the URBAN Community Initiative programmes (1994–1999 and
2000–2006) funded by the ERDF, and the EQUAL initiative (2000–2006)
funded by the ESF similarly were based on local partnerships (European
Commission 2013). Transferring the LEADER concept to urban areas has
in Finland been realised with the 6AIKA-strategy, which is organised by the
Helsinki-Uusimaa Region and gathers the six largest cities in Finland, aim-
ing to “enable better and more efficient services in cities and urban areas,
to improve the competitiveness of businesses in the cities, and to utilize the
innovation capacity of the entire urban community” (cited from 6AIKA
homepage,, and this is performed by inviting research and educa-
tional institutions and civic organisations to join the projects (Arbets- och
Näringsministeriet 2014: 54).
Looking at the Rural development funds, the LEADER approach will
also be included in the CLLD approach, and here, the alteration consists of
a multifunded approach, that is the possibility of funding LEADER proj-
ects also from other funds than the European Agricultural Fund for Rural
Development (EARDF). Generally, and contrary to the other develop-
ment funds, LEADER is strengthened during this new period of funding.
Other differences for rural development similarly concern improved coor-
dination, such as the abolishment of the four axis system and schemes, and
including all measures in one list instead (European Commission 2011).
Observing recent alterations in Finnish national development pro-
grammes, OSKE ended in 2014 and was partly replaced by INKA, a pro-
gramme implemented by the Ministry of Employment and the Economy,
with five selected national innovation themes and five partnership urban
regions. Half of the programme is funded by the state, the other half by
the partnership regions, and additionally, Structural Funds financing will

be directed to support the selected themes. The background to this altera-

tion was a proposition from a working group of the ministry, stating that
the OSKE programme was of best advantage to smaller regions, while its
benefits for larger regions had decreased since the 1990s. Accordingly,
the INKA programme aims at supporting fewer and stronger innova-
tive centres in order to respond to the global challenges of competition
(Lindqvist et al. 2013: 14–15). While OSKE established local innovation
centres, INKA is managed and controlled by the Finnish Funding Agency
for Technology and Innovation (Tekes), an agency directly subordinated
to the Ministry of Employment and the Economy. In summary, both EU
and Finnish national policy is increasingly focused on developing city-
regions on behalf of peripheral areas, with the emphasis on restructuring
the sparsely populated northern and eastern regions being the primary

5.3.6 Summary: Administration Reforms and Programmes

Over Two Decades
The restructurings in Finland during the last two decades have very far
been political compromises, leaving an unfinished, dual regional structure.
Both the emergence of a regional self-governing institution and an exten-
sive merger of existing municipalities have been hindered as a result of
political compromises. According to Finnish legislation, municipalities are
autonomous and cannot be forced to join together. However, at the same
time, municipalities must obey state-given directives regarding service
production. Although the legislatively strong, albeit small, municipalities
maintain complete responsibility for all municipal tasks, they have had the
opportunity to construct joint municipal organisations when the popula-
tion base has been too small (see Prättälä 2012). Regional development
is the responsibility of such a joint organisation, while funding is largely
handled by state regional units. The regional reforms in the 1990s and
the influence of the Structural Funds of the EU did, however, constitute
the starting point for a regional structure with the opportunity to under-
take bottom-up initiatives. This may also be regarded as a move from a
policy of regional equalisation towards a focus on regional growth centres.
This was further amplified by the Lisbon Agenda and the Europe 2020
Agenda, which have recommended regional specialisation and regional
competition. Still in 2011, the Finnish national development programmes
enhanced this concentration on regional growth and specialisation until

2012, when the economic crisis caught up with the Finnish government,
and as a consequence, the importance of regional development centres
was reconsidered. De jure outcomes of administration reforms and altera-
tions of development programmes are listed below.
De jure outcomes of administration reforms

• The construction of the Regional Councils was the first ever locally
based regional development unit in Finland.
• Multifunctional regional state authorities have been constructed.
The number of institutions on the regional level has step-by-step
decreased significantly. The administration territories of the ELY-
centres now follow the borders of the Regional Councils. Still,
different competences of ELY-centres along with different sizes
of administration territories of ELY, AVI and Regional Councils
account for an inconsistent structure.
• Development responsibility and the financial resources are split
between the Regional Councils and the state authorities.
• The Regional Councils have acquired more tasks and increased their
competences. Legislatively, the Regional Programme is in a stron-
ger position. The Ministry of the Interior decides on the division of
Structural Funds between the other ministry sectors, but should do
this, based on priorities in the Regional Development Programmes.
• Municipalities and joint cooperation bodies have been enlarged and
strengthened as a consequence of the PARAS reform and current
municipal restructuring efforts.

De jure outcomes of alterations of development programmes

• More emphasis was put on joint regional action in the programme

period for 2007–2013 for the Structural Funds. The 2014–2020
period is focused on increased national coordination between differ-
ent programmes.
• In rural funding, more emphasis is put on the second pillar for rural
• The LAGs of the LEADER approach have continuously been further
institutionalised and strengthened.
• The KOKO programme merged different development pro-
grammes, with the intention of improving coordination and regional

Regional Councils and AKO AMO KOKO

regional reforms programme programme programme Decentralising
programme programmes
Municipal reform

ALKU reform Centralising

Finnish Gradual increase of
legislated municipal tasks KOKO trends
Government OSKE to INKA

1990 2000 2010 2020

Reduction of funding
European Centralising
Union Increase of trends
specialization directives

Introduction of Emphasis on regional

Structural Funds joint working table
Introduction of LEADER LEADER strengthening trends

Fig. 5.2 Centralising trends in the regional policy of the Finnish government
and the EU during the last two decades

• The termination of the KOKO programme and the termination of

the OSKE programme in favour of the INKA programme, focusing
on merely five urban regions, are substantial drawbacks for bottom-
up regional development processes.

Figure 5.2 summarises the alterations described above, depicting a

trend towards centralising activities especially by the Finnish government.


Ostrobothnia is slightly below the average size of regions in Finland with
175,000 inhabitants, situated on the west coast about 500 km from the
growth centre in and around Helsinki. The region is divided into four
subregional units, largely based on commutable areas. Of these, the Vaasa
region is the largest, with a population of 91,000. The city of Vaasa is to
a large extent the economic engine of the whole region, with its versa-
tile technology industry. The Jakobstad region in the north has 49,000
inhabitants and in this region boat manufacturing, among other things, is
strong. Sydösterbotten in the south and Kyrönmaa in the east are mainly
rural areas. Kyrönmaa has a large number of commuters to the city of
Vaasa, while Sydösterbotten, on the other hand, suffers due to its remote
position far from the regional centre.

5.4.1 Administration Reforms

In Ostrobothnia, the debate concerning new municipal borders and
extended cooperation has been intense since the PARAS process started in
2005. New healthcare districts have been established to meet the minimum
level of 20,000 inhabitants per district. The progress of municipal enlarge-
ment has advanced unevenly in the region, but merging and/or enlarge-
ment of cooperation areas have been discussed in all the municipalities.
The sustainability of service production is weighted against local indepen-
dence and the possibilities for the production of services in two languages.
Largely, subregional centre municipalities are in favour of mergers, while
the surrounding municipalities are opposed. In addition to the fear of the
cities dominating the surrounding rural areas, there is a language com-
ponent in the bilingual region complicating merger activities. The new
regional division in and around Ostrobothnia has been a matter of argu-
ment during the process of the reform project, and language differences
have been the main drivers of the conflicts also in this case. One matter
of debate has been the placement of the ELY-unit (in Finnish-speaking
Seinäjoki or bilingual Vaasa) and whether the neighbouring region Central
Ostrobothnia should cooperate with the bilingual Ostrobothnia or the
uniformly Finnish-speaking North Ostrobothnia. Although the regional
structure is more uniform in Ostrobothnia due to the ALKU reform,
the differences in competence of ELY-centres might still be confusing.
The ELY-centre of neighbouring Southern Ostrobothnia also governs
the regions of Ostrobothnia and Central Ostrobothnia, while there is an
ELY-centre also in Ostrobothnia with fewer competences. In the case of
the AVI-centre, despite the fact that its governing territory matches the
borders of three ELY-centres, there is still not just one field of action at
the regional level, since the territory of the AVI-centre also covers the
Tampere and Central Finland regions. In 2014, the funding activities were
transferred to Keski-Suomen ELY, far to the east of Ostrobothnia, greatly
enlarging the area of action.

5.4.2 Development Programmes

With regard to the changes in development funding, the introduction of
the AMO in 2001 and later KOKO in 2010 has supported three devel-
opment centres in Ostrobothnia. Vaasa Region Development Company
(VASEK) convenes the municipalities in the Vaasa Region and Kyrönmaa

Region, the Regional Development Centre Concordia brings together

the municipalities in the Jakobstad Region while Dynamo coordinates
the three municipalities in Sydösterbotten. The LEADER-financed LAG
Aktion Ostrobothnia has increased its activity (in part by a fusion of the
previous LAG Studiefrämjandet, Villages of Swedish Ostrobothnia and
the Coastal Action Group) during the 2000s and now manages numer-
ous projects. The municipalities in the Kyrönmaa Region have formed
their equivalent LAG YHYRES. In 2007, the Merinova Technology Centre,
financed by OSKE, formed the development network for Vaasa Science
Park, where business, science and public institutions meet to advance sci-
ence cooperation. Regarding the INKA programme, the Vaasa region is
fortunate to have been accepted as one of the five partnership regions in
Finland, thereby receiving funding for developing its energy technology
cluster. One major change for Ostrobothnia in the 2014–2020 period is a
significant cutback of structural funding due to the cohesion policy of the
union, estimated by Regional Council officials to shrink the total funding
by up to 50 %.


In order to depict de facto alterations of the possibilities of regional mobil-
isation in Finland and Ostrobothnia, nine interviews with key actors have
been conducted, at the regional, state as well as the European level. These
interviews strongly suggest a shift towards decentralisation in the 1990s
and a consequential turn towards centralisation in the 2000s.

5.5.1 Decentralisation Trends in the 1990s

Looking at the administrative structure in Finland, the reforms in the
1990s did in practice transfer influence from state regional units to the
Regional Councils, and the experience of the regional actors interviewed
is similar, as one Regional Council official stated that “1994 was the big
change, when for the first time people realized that things can be done
regionally and we do not need to rely on the state”. A colleague developed

In 1994, there was a paradigm shift in the approach to regional develop-

ment in Finland as the new Regional Development Act was renewed, the

Regional Councils were founded and regional development responsibilities

were taken away from the State Provincial Offices and given to the Regional
Councils. Then, in the 1990s, we had a period of a functioning bottom-up
way of doing things, also looking at the foundation of Environment Centres
in 1995, and the TE-Centres in 1997, which handed also the state regional
administration a room of manoeuvre to make their own decisions.

Clearly, this official understands bottom-up processes not as initiatives

springing from the local society, but as processes in opposition to state
government steering. In any case, the experience of strengthened regions
due to EU membership is evident in the conducted interviews, as one state
government official also stated that the “EU membership has strength-
ened the role of the regions a lot” and that the Structural Funds allow
“the regions to get earmarked funds that are safe for seven years, they do
not need to be afraid of what happens when there is a new state budget
period, and they have consequently been able to plan pretty far ahead”.
The strengthening of the regions is thus viewed as closely connected to
development funding, which is even said to “constitute the opportunity
for the regions … it is where the potential for regional mobilisation is
located today”, as one Regional Council Official stated. Another Regional
Council Official added that “the programming periods 1995–2000,
2001–2006 and 2007–2013 have all given the regions a fairly large mar-
gin of manoeuvrability, since the EU has been careful to point out that
Structural Funds are not central government funds”, “the implementation
of the Regional Development Programme is done through the Structural
Funds rather than through state funding”, and that “the counterweight
against increasing central control is the Structural Funds”. When dis-
cussing the positive impact of EU funding on regional mobilisation,
the LEADER programme has been praised in all conducted interviews,
described as “a genuine bottom-up process”, and that “we should not tell
the villages what they should do, they know it themselves”. The introduc-
tion of LEADER in Finland in the 1990s is described by one regional
actor in the following manner: “in the beginning it was very activating; it
was a pretty amazing situation that anyone could write a programme and
apply for the money and by themselves map out the region it would serve.
Mentally, this had a regionalizing effect.”
One positive aspect of the regional policy agenda of the EU highlighted
in the interviews is the enhancement of connectedness and networking
within regions. A state government official, judging the impact in regions

in the whole country, saw that “the construction of networks is one of

the major achievements of the EU programmes, because they have forced
the different parties to come to the same table”, “regions and universities
now work together” and “discuss long-term development”. Networking
is said to be on an especially high level in Ostrobothnia, where actors such
as the Regional Council, the ELY-centre and the LAG Aktion Österbotten
continuously discuss and request opinions of each other, also regarding
additional funding for projects.
Regarding the national development programmes, such as OSKE,
AKO, AMO and later KOKO, they are, like the EU programmes, appreci-
ated for their networking capability: “KOKO created networks between
actors, and went even further than the EU programmes regarding this
matter” and “KOKO increased understanding between the state and the
region”, one state government official pointed out. KOKO worked as
“a connecting link between politicians and the industry” and raised the
awareness of “the region and not only the hometown”, a regional actor
in Ostrobothnia stated. A Regional Council official similarly saw benefits
of the national programmes: “competent associations, such as VASEK and
Dynamo, have emerged, who are good at supporting development with-
out having an authority position.”

5.5.2 Centralisation Trends in the 2000s

The aim of the ALKU reform, to simplify the regional structure and
strengthen the Regional Councils, succeeded only partly, according to
the interviewees. Regarding the position of the Councils, although they
did receive a few minor additional duties, the factor that would have
solidified the position of the Councils as the main regional development
organisation, i.e. the increased relevance of the Regional Development
Programme, has not been realised according to the actors interviewed, as
seen in the following quote of a Regional Council official:

The Regional Development Programme should have a leading role in

connection to the strategic performance agreements of ELY … and also
AVI. This has not been realized. Despite the fact that the Council partici-
pates in planning, the strategic performance agreements of AVI and ELY
are completely dictated by the manifestations of the ministries … when the
ministries lost their regional influence, for instance when the Ministry of the
Environment lost its regional Environmental Centres … an almost bizarre
need to strengthen governance from above in various ways occurred.

Another Regional Council official similarly implied that.

You do not really know what the task of the regional level is, even though it’s
very clear when you read the legislation … indications coming from the state
are that the municipalities and the central government are the main thing,
then you end up in a conflict when you should bring issues forward, … several
opinions in the region are brought to the state, instead of having the people
in the region talking among themselves and then forwarding a common idea.

Here, the municipal reforms aiming at creating larger municipalities want

to address this problem, and consequently, larger municipalities might
replace the structure of regions in the long run. The competition between
small municipalities is recognised both regionally and nationally, as stated
by a state government official: “since we have such small municipalities
and regions, the fast ones easily eat the slow. Local authorities should bear
in mind that what benefits the entire region is probably also of benefit to
the small municipality in the long run.”
Regarding the simplification of the regional structure, although the
number of organisations has been reduced and the administrative territo-
ries have become somewhat more uniform, the functioning of the ELY-
centres is comprehended as anything but simple, as stated by a regional
actor: “when the ALKU reform began, the aim was 15 identical ELY-
centres, not centres on three levels as it is now … it is very complicated,
the interaction between different ELY centres. For example, in Vaasa,
the ELY-centre needs to co-operate with the Jyväskylä and Turku ELY-
centres.” An official at the Ostrobothnian ELY-centre pointed out the dif-
ficulty from the point of view of the citizen: “now they make phone calls to
everywhere to determine where different things are handled.”Could the
“ELY centres” and “ELY centre”
be hyphenated, as in the other instance in the same quoted text?yes
Looking at the Structural Funds, these are generally viewed as support-
ing regional mobilisation, but centralisation trends have been detected
in the new programme period. While rural development funding largely
remains on the same level, regional actors fear a decline of mobilisation
power when ERDF and ESF funding is cut down. One Regional Council
official sees a trend of more specific steering of the use of development
means, while state government officials explain this by the new Europe
2020 agenda, by which funding should be concentrated on key enabling
technologies rather than on infrastructure investments. The state govern-
ment comprehension of the 2020 agenda is a need to enlarge areas of

action, since “this new technology requires a lot of collaboration across

borders, we need bigger networks” in order to create possibilities for more
“decentralised development in the technology industry” and find replac-
ing industries to the declining forest and ICT sectors in the regions. One
state government official identifies the Regional Councils as obstruction-
ists in this context, since they are too small and too political: “they only try
to hold onto what they have, and this prevents them from future-oriented
thinking.” To elevate the handling of the structural funds to the NUTS2
level follows the logic of achieving a sufficient amount of critical mass,
while regional actors on the other hand fear that “decisions are moved
far away, to people who do not understand the region”, and that “small
networks, where people know each other and administration features are
simple, work better”.
Regional actors saw centralisation change from being a general trend
during the 2000s to an accelerating policy following the financial crisis:
“it has happened gradually, in small steps without large turning points
… towards larger units, more centralization, larger municipalities … we
seem to think that large units and concentrations are vital for our com-
petitiveness.” A Regional Council official sees the reduction of norms on
municipalities as the essential factor when the public finances were saved
during the economic crisis of the 1990s, since the municipalities were
able to adjust their activities according to local circumstances, but now,

starting at the end of the 1990s, the ministries saw that the municipalities
started to function pretty much by themselves, since the municipalities have
very professional staff … and now the ministries have reintroduced a large
amount of norms, but now in the form of legislation.

Here, the Regional Council employee refers to a ministry report, which

concludes that the legislative duties of municipalities have increased drasti-
cally during the last two decades and now amount to 535 different tasks
(see Hiironniemi 2013: 19, 27). The official is annoyed at what this per-
son views as micromanagement of the ministries, for instance the fact that
“the Ministry of the Environment gives grants for the planning of wind
power which is completely absurd”.
Regarding the Finnish national programmes, the ending of KOKO is
said to be motivated by first, the economic crisis, and second, that the new
government elected in 2011 is focused on urban growth, as explained by
a state government official: “Now this government’s target is urban policy

… to try to achieve an urban impact on how the money is distributed and

to conduct projects at a bigger scale than before.” One regional actor in
the Sydösterbotten region complained about the removal of KOKO as

They started something and finished it in the middle, it was a half-measure

… Surely it would have been useful to have these regional nodes that cooper-
ate nationally and find new approaches to development. But it was probably
hard to get decision-makers locally, and especially nationally, convinced of
its benefits. Processes of change that we imagined may not be effective after
one or two years, as they are processes of longer terms.

In Ostrobothnia, the direct setbacks of the termination of the KOKO pro-

gramme are that the peripheral subregions, especially Sydösterbotten, now
lack a forum for development and are increasingly dependent on the Vaasa
region. Similarly, the termination of the OSKE programme in favour of the
INKA programme is regionally viewed as a setback for regional influence,
since the OSKE programme “was well regionally rooted and had a clear
bottom-up approach. Now it will be replaced by the INKA programme,
which is actually an innovation programme for larger urban areas, and is
shaping up to be very much controlled from the top”. Another regional
actor states that the INKA programme is

financed by TEKES (the Finnish government funding agency for inno-

vation) and consequently the decisions are made in Helsinki. You have a
regional recipient but the decisions are made elsewhere … discussions are
made with the ministry but the money is later retrieved from the ERDF or
TEKES. Thus, it becomes difficult to keep it together at the regional level.
The ministry should trust the regions more that they get it together.

From the point of view of the state government, the INKA programme
as well as the government programme is in line with the EU 2020 agenda
of limiting the number of priorities in order to increase effectiveness “by
reaching a critical mass with real impact” (European Commission 2012b:
As we have seen, the focus on city-regions on behalf of territorial
regions is evident in the Europe 2020 agenda and not least in the policy of
the current Finnish government. This is at the state level motivated by “a
complete restructuring of the industry in Finland during recent years, with
the decline of Nokia and the forest industry, the factory-based industry is

disappearing and regions must do other things than build roads … they
must seek their own strengths and consider how to improve them”, as one
state government official stated. The same official complained about the
rigidity of funding since

cohesion funding is based on regional borders … the borders are artifi-

cial since the countries have constructed them in order to receive as much
money as possible, and this is not always functional … urban policies are
based on functionality, where you move beyond borders. You have coopera-
tion with eleven cities or six cities, but there are no available resources to
support these processes … other sources of finance must be found.

On the other hand, a regional actor in Ostrobothnia implied that “we

also need these permanent regions, they are also sources of identity and
belonging, and of course we also need the functional regions, interaction
with global processes, … we need both, and a good regional development
is a synthesis of the two”.


The empirical evidence presented in this chapter strongly suggests that the
possibilities for regional mobilisation were strongly improved in the 1990s
in Finland due to a regionalisation agenda, which in turn was heavily influ-
enced by the EU. Similarly, trends of centralisation are suggested in the
2000s, not consistently in the administrative and legislative reforms, but
very strongly in the interviews with regional actors. One recent instance is
that while uneven EU funding was compensated by national programmes
such as POMO and ALMA in the 1990s, no such compensatory funding
is present in the current funding period. Perhaps, the path dependency (as
described in the SRA theory) of a unitary state is visible here, with national
structures reacting to wilful regions.
At the same time, both the Finnish government and the EU have
embraced the more or less universal neoliberal agenda, emphasising the
importance of regional growth poles and a certain amount of critical mass
in order to stand the test of global competition. Yet, during the last decade
of structural reforms, the Finnish government has ignored the bottom-up
manner of conducting reforms and instead aimed at strengthening the state
regional units rather than locally tied regions, while the EU has still used
regions as a way of achieving influence. The mere fact that the Regional

Councils are not directly elected units with taxation rights is an exception
to the rule of regional recipients of EU funding. Also following the neolib-
eral notion, the regions in Finland are too small, with an average popula-
tion of 301,000, and when excluding the Uusimaa region, with one and a
half million inhabitants, the average population is only 226,000 (Statistics
Finland 2013). Regarding local government, the situation is similar, with
315 municipalities averaging about 17,000 inhabitants. While larger units
might be beneficial, the geography of Finland, with large sparsely popu-
lated areas and only one large concentration of population, administrative
structures adjusted to local circumstances are to be preferred. This is in
line with the second generation of decentralisation theory presented ear-
lier, and is also suggested in an OECD report as the possibility for mul-
tiple models of regionalisation, for instance a region-based development
model in sparsely populated areas together with municipal mergers in the
densely populated areas in the south (OECD 2010: 29). By neglecting
the strengthening of a locally tied regional unit on behalf of large munici-
palities, the possibility of being able to choose whether services and other
activities should be arranged on a local or regional level disappears, and
this of course has democratic implications.
Building structures that enable communicative networks and a tradi-
tion of participation is a long-term project, as also the termination of the
KOKO project in Finland revealed. Participatory governance is all about
traditions while the level of decentralisation is less important, and since
reality is complex and “messy”, one model of arranging things is not
appropriate everywhere. Perhaps the most critical difficulty in the Western
society today, i.e. the vast democratic deficit that emerged with the decline
of the Keynesian state, is visible in the division between functional and
territorial regions, where development activities increasingly gravitate
to the first while democratic legitimacy is tied to the latter. The case of
Ostrobothnia is typical here, where the successful subregion of Vaasa joins
in on national and international networks and the surrounding subregions
of Sydösterbotten and Jakobstad are left out, although they are all part
of the same region. Basically, the conflict becomes concentrated between
peripheral, sparsely populated areas and regional centres, suffering from
uneven circumstances. If regional equalisation policies are abandoned on
behalf of functional regions, the democratic legitimacy also needs to alter
towards post-liberal democratic conducts. This is perhaps especially dif-
ficult from the point of view of a unitary state, which attempts to increase
central coordination, but at the same time strongly supports the networking

of city-regions. Following the empirical analysis in this chapter, functional

regions may even be interpreted as an opening or method used by the
state government to direct development at the regional level.
A difference of interpretation of regional mobilisation and bottom-
up processes is visible in the conducted interviews, both as all sorts of
regional activity in opposition to top-down steering and as grass-root-
level-initiated activities and processes necessarily avoiding also local elites.
The LEADER method of engaging civic society is praised in this context,
emphasising that an increased room for manoeuvre by regional authorities
does not meet the demands for real regional mobilisation.

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On the Democracy and Relevance
of Governance Networks: The Case
of Ostrobothnia, Finland

The event of governing through networks has given rise to the rapidly
growing research field of governance network theory. Although this field is
focused on the structures and measures of governance and administration,
it is obvious that the impacts on democracy and the legitimacy of gover-
nance also receive a significant position. In this study, the aim is to highlight
the impact the relevance of the output of a governance network has on its
democratic qualities, and this will be executed by an in-depth study of the
production process of a specific policy programme, namely the Regional
Development Programme in the region of Ostrobothnia in Finland. The
hypothesis put forward is that when the output of the network is certain to
receive relevance, casual conversation will turn to high stake debates, and
consequently, the deliberative democratic qualities will be put to the test.
One of the major challenges of contemporary Western society is falling
public election turnout and a general indifference for traditional forms of
political participation. In policy planning, on the other hand, policymaking
has been described as not being a direct product of elected politicians, but

Originally published in Scandinavian Journal of Public Administration, Vol 18,

No 2. With permission of the School of Public Administration, University of

© The Author(s) 2017 127

K. Nordberg, Revolutionizing Economic and Democratic Systems,
Palgrave Studies in Democracy, Innovation, and Entrepreneurship
for Growth, DOI 10.1007/978-3-319-40633-6_6

a product developed through governance processes (Sørensen and Torfing

2007: 4). In democracy theory, this is evidence for the occurrence of post-
liberal democratic conducts, basically implying an interactive character to
democracy, including public as well as private actors (see e.g. Sørensen and
Torfing 2005). In the post-liberal tradition, the inclusion of stakeholders
in the planning of development measures will inform the process, produce
better, more suitable decisions and counteract societal fragmentation and
resistance to policy change (see e.g. Rhodes 1997; Kickert et  al. 1997;
Fung and Wright 2001; Hirst 2000; Hiironniemi 2005). At the same time,
it is obvious that the virtues of the well-ordered representative system are at
stake, since models for handling accountability, equality and inclusiveness
are difficult to define (Sørensen 2010). Additionally, the output is uncer-
tain, and actors in governance networks often complain about the lack of
clear and visible results (Sørensen and Torfing 2007: 13). During the study
of the governance network in question, the impact of the relevance of the
network output on democratic indicators became impossible to overlook.
The relevance of the policy programme studied is unambiguous in legisla-
tion. The relevance in practice is a different story. The case study illustrates
how the output relevance especially affects the deliberative democratic
qualities, which seemed to be very positive as long as easy, non-specific and
visionary issues were discussed. While deliberative democracy has received
an important position in the field of democracy theory during recent years,
it has proliferated to both governance network theory and planning theory.
Especially in the latter, the virtue of deliberation has been criticised for
not paying attention to the challenge of resolving actual political conflicts
(Bäcklund and Mäntysalo 2011).
The study is structured as follows: first, the characteristics of the case
study are presented, then the theories of deliberative democracy and gov-
ernance network theory are described in order to compile an ideal model
for an inclusive policy planning process. The case study is then evaluated
against this model and conclusions follow.



Public administration in Finland has traditionally consisted of small

municipalities and a strong state power, while regional administration has
merely existed in the form of state districts. A regional structure with some

elements of self-governance has formed during the last two decades, but
state control is still strong. Today, the regional level consists of two types
of state regional bodies: AVI and ELY and the Regional Councils, which
are joint municipal organisations. Since regional development is a task
divided between ELY and the regional councils, different types of inclu-
sive cooperation groups have become standard procedure.

6.2.1 Regional Development Strategies

The case studied here is the planning process of the Regional Development
Programme in the year of 2009. Regional Councils are through legisla-
tion obliged to prepare a long-term strategic plan stretching to 2040,
the Regional scheme, as well as an implementing plan the Regional
Development Programme, for the next four-year period. The programme
specifies strategic choices and development aims of the region.
Regional development legislation was reformed in 2009 in Finland, put-
ting a stronger emphasis on the relevance of the Regional Development
Programme. The programme is now said to be the central strategy on the
regional level, coordinating all other development programmes and acting
as the leading vision for the region. Consequently, both state and municipal
authorities must pay attention to the programme in their activities. The
programme should include “development targets based on the region’s
potential and needs, the most important projects in terms of regional devel-
opment, and other essential measures to achieve the targets and finance the
planned programme” (Regional Development Act 1651/2009).
Legislation also demands a strong element of inclusion in the planning
process of the programme, stating that it must be prepared in cooperation
with state institutions, municipalities and other associations and organisa-
tions that take part in regional development. Since legislation is not more
specific about the manner in which this inclusion should be performed,
each Regional Council may design the planning process very much at its
own discretion. Regarding the content of the programme, the Finnish
Government’s Decree on the Development of Regions (1224/2002, new
version 1837/2009) gives some directives: priorities and objectives for the
development of the region, a description of the coordination between the
Structural Funds programmes and other programmes and certain indica-
tors for monitoring development programmes and projects that should be
included. On the other hand, the selection of subjects for the participants
to discuss may be decided by the Councils.

Public Regional Scheme

Kick-off Seminar acceptance by

Seminar 2009/9/25 Assembly of the

Regional Council
Working groups
meetings and Writing of Regional Writing of
Preparatory Regional
writing of Regional Scheme on Regional
work Programme on
statements Scheme public display Programme public display
June 2010

December March October December March April

2008 2009 2009 2009 2010 2010

Political Programme
Seminar acceptance by
2009/11/2 Assembly of
the Regional

Stakeholder/public input Political/public input Political/public input

Fig. 6.1 Timeline of the preparation of the Regional Programme and the Regional Scheme

There is no official document determining the chosen conduct of the

planning process in Ostrobothnia, but the Council has still used the same
model for some years now, as stated by Regional Council officials. The
structure of the planning network is based on a selection process by which
the Regional Council singles out individuals in the region who are invited
to take part. Yet, the process is open to anyone who wants to participate,
but unsurprisingly, generally only invited actors participate. There are two
unofficial principles to this selection: (1) practicality is most important,
implying that persons possessing the needed type of knowledge are invited
and (2) the level of inclusion entails that the Council strives to include all
society sectors, also marginalised groups. Hence, the process has a strong
ad hoc character, due to the lack of official rules stating for instance inclu-
sion and participation possibilities.
The studied process consisted of ten expert groups and five subordi-
nated groups.1 To some extent, each expert group forms its own working
method, but a Regional Council official often directs the process. The
participants receive previous regional programmes, regional and national
strategy documents and different kinds of regional statistics as background
material for the process. Every expert group compiles a statement on the
theme they are chosen to debate, and the actual writing of the programme
is then conducted by the Regional Council. In this task, the Council aims
at compiling what they view as the most important ideas of the expert
groups, and at the same time considering available strategies and pro-
grammes at EU, national, regional and subregional level. The programme
proposal is then available for public review and must be accepted by the
Board and the Assembly of the Regional Council (see Fig. 6.1 for timeline
of the planning process).

6.2.2 Planning Practice

Before studying the planning process in detail, it is necessary to take a
look at the common planning practices in Finland. Four planning the-
ory paradigms are recognisable in the Finnish context: Comprehensive-
rationalist, incrementalist, communicative and agonistic planning theory
(Bäcklund and Mäntysalo 2011).
The Comprehensive-rationalist planning theory has been the leading
post-war planning rationale in Finland. A clear division of roles between
elected politicians and public administrators is implied here, with the
former contributing with values and goals and the latter with value-free

knowledge. Since knowledge is comprehended as objective and apolitical,

the element of public interest remains passive and only defined through
the careful gathering and analysis of data. In the 1970s, elements of incre-
mentalism were induced in Finnish planning practices, basically question-
ing the possibility to gain full and impartial knowledge. Incrementalism
recognised that since perfect knowledge is unobtainable, a political debate
between conflicting demands is inevitable, and consequently, decision-
makers contribute to the planning process with their values and opin-
ions (Bäcklund and Mäntysalo 2011: 338–339). These are both theories
belonging to the aggregate tradition, implying reconciliation of different
interests through a hierarchical governance logic (see March and Olsen
Instead, Communicative planning theory implied the introduction of
an integrative democratic tradition, where citizens are regarded as actors
participating in a more direct fashion. Communicative planning is based
on the theory of communicative action and deliberative democracy theory
discussed later on. Essentially, the assumption is that every individual with
a stake in the issue at hand should be involved in all stages of planning,
while decisions should be reached through rational argumentation in
search of consensus. While supporting the integrative aspect of communi-
cative action, Chantal Mouffe (2000) sharply criticises the Habermasian
ideal of consensus through rational argumentation, implying that striving
for consensus pushes genuine political conflicts out of the political arena
(Mouffe 2000: 93). Politics can by definition never be free of a pluralism of
values, and therefore, a formation of an us/them configuration is unavoid-
able. However, instead of participants being enemies, Mouffe proposes
the use of the concept of adversaries, i.e. opponents having different val-
ues without contesting the right of the opponent to defend these values.
Following Mouffe, Bäcklund and Mäntysalo (2011: 342–344) define ago-
nistic planning theory as the latest paradigm shift in planning theory. This
theory imply a culture of planning more tolerant to conflicts of meaning
systems, acknowledging that participants have different cultural, societal
and personal experiences, and consequently openly recognising the limits
of achieving consensus. In this view, democratic decisions can be partially
consensual, but “with the respectful acknowledgement of differences that
remain unresolved” (Bäcklund and Mäntysalo 2011: 343).
By investigating planning practices in four urban areas in Finland,
Bäcklund and Mäntysalo conclude that integrative forms of democracy
are used, but citizen participation has largely been inserted on top of the

comprehensive-rationalist model of planning, resulting in an institutional

ambiguity. The authors suspect that the cities have given little thought
to the actual purpose of citizen participation, and the procedure for the
handling and evaluation of the gathered information is unresolved, even
possibly leaving a single civil servant defining its relevance. The authors
see nothing less than a complete institutional restructuring necessary
for empowering actual integrative forms of democracy (Bäcklund and
Mäntysalo 2011: 347–348).
Accordingly, the case study investigated here does involve some inte-
grative elements in the form of the so-called expert groups.


Governance network theory has during recent years incorporated delib-
erative democratic ideals, and accordingly, an ideal model for participa-
tive planning will be constructed here by discussing both these strands.
Mäntysalo et  al. (2011) illustrate how the use of deliberative ideals has
become commonplace in planning legislation in Nordic countries. The
planning process studied here may be regarded as a governance network
striving for deliberative democratic ideals.

6.3.1 Governance Network Theory

The use of governance networks in policy planning may be regarded as a
response to increased policy and societal complexity and be traced back to
the obsoleteness of the Comprehensive-rationalist planning paradigm. The
general idea, supported by many governance network theorists, and the
European Union, is that by including the experience of experts and stake-
holders, development policy will be better adapted to actual local circum-
stances, and consequently, efficiency and legitimacy will be raised. Some
theorists have tried to conceptualise this as a “democracy of the affected”
(Eckersley 2000; Dryzek 2007). Regarding the Finnish case, Hiironniemi
(2005) concludes that “traditional administration gradually transform into
the control of external and internal networks. This development has taken
place gradually and partly unconsciously or at least without clear strate-
gic control”. The broad development, usually described as a turn from
government to governance, is in this manner not originally a bottom-up

movement, but is initiated by state governments, and since the process

inevitably is dependent on the action of local stakeholders and their will
for cooperation, it becomes difficult to control. As a consequence, even in
a unitary state such as Finland, the supreme power of the state authority
is weakened and its governance becomes more selective (Salminen 2008:
Sørensen and Torfing (2007: 12–13) recapitulate four benefits fre-
quently highlighted in the governance network literature:

1. Governance networks enable proactive governance, since opportunities

and problems can be identified in an early stage and solutions can be
more flexible.
2. Governance networks are instruments for aggregation of information.
The actors in the network often have deep relevant knowledge which
helps qualifying political decisions.
3. Governance networks are arenas for consensus building. Consensus is
not always possible, but the networks can at least civilise conflicts.
4. Governance networks prevent implementation resistance, if relevant and
affected actors are able to participate and develop a sense of joint
responsibility for the decisions taken.

On the other hand, governance networks complicate the neat model of

representative democracy, where citizens have equal opportunity to partic-
ipate and elected representatives are held accountable through periodical
elections. Five main deficiencies are visible in the literature of governance
networks (Sørensen and Torfing 2007; Sørensen 2010; Nyseth 2008;
Hendriks 2008; Dryzek 2000):

1. There are no commonly accepted democratic norms for governance

networks. Consequently, the ground rules can be at the hand of the
most resourceful actors. The governance networks thereby are at risk of
becoming closed, elitist and narrow.
2. Actors in governance networks are not accountable for the decisions the
network makes. Policy programmes may be approved by politicians
who have not participated in the formation of the policy or even know
the subject area.
3. A lack of transparency potentially adds to legitimacy problems of the
governance networks.
4. Governance networks often score low on inclusivity.

5. Actors display frustration over a lack of clear and visible results.

Representative democracy and its virtues of equal rights through voting

and a clear line of accountability are difficult to achieve by the conduct
of governing through participative networks (see e.g. Dryzek 2007).
Largely, the governance network literature does not comprehend gover-
nance networks as a complete substitute to the representative system, but
merely as a complement, although many scholars see a major restructuring
of the governance system as inevitable (as e.g. Bäcklund and Mäntysalo
(2011) suggested regarding planning practice). However, four factors
influencing the democratic quality of a governance network may be com-
piled from the literature: inclusivity, accountability, deliberation and meta-
governance (Sørensen and Torfing 2007; Nyseth 2008; Hendriks 2008;
Dryzek 2000).
Of course, autonomy is a fundamental feature of governance net-
works. If autonomy is stripped, the networks simply lose their purpose.
Metagovernance may be described as “an array of tools consciously
designed and deliberately applied to influence the way in which a gover-
nance network contributes to the governing of society” (Damgaard and
Torfing 2011: 295), and consequently, metagovernance may be regarded
as a system allowing for a certain level of autonomy through the “regulation
of self-regulation” (Sørensen and Torfing 2007: 233). Metagovernance
may accordingly be comprehended as a method for steering governance
networks and thereby connecting their output to the accountability of
elected representatives, while simultaneously retaining a certain level of
autonomy. This is of course a delicate matter, since participants easily feel
inhibited and constrained when the level of control becomes too tight.
The metagovernance tools selected must therefore be appropriately sub-
tle and frame setting in order to maintain the direction of the process
at the same time as participants feel enabled and supported rather than
constrained. These tools may be more distant, such as funding, objec-
tives and rules stipulating institutional procedures and the composition
of participants, while other tools imply direct involvement in the form of
for instance expert advice, consultancy and tailor-made interventions and
solutions (Damgaard and Torfing 2011).
Inclusivity is another central virtue of governance networks, corre-
sponding to the image of a “democracy of the affected”. Basically, inclu-
sion implies the opportunity, the right and the capacity of the affected to
directly participate or otherwise influence the policy process in question.

Here, Dryzek (2007: 268) advocates varying degrees of inclusivity and

a plurality of issue-specific demoi rather than an all-purpose demoi.
Since organised groups are easy to find and often possess the capacity
to participate, the challenge lies in finding and including unorganised,
marginalised stakeholders. Another difficult issue is determining who the
affected are, the degree of their affectedness and the suitable degree of
inclusivity. In solving this issue, Dryzek (2007) recommends continuous
deliberation with the affected. Generally, inclusivity is a deficiency visible
in governance networks, often explained by the presence of elements such
as technocracy or elitism. Hendriks (2008: 1026), investigating Dutch
governance networks, concludes that

The Dutch administration’s attempt to steer networks has been more con-
cerned with fulfilling entrepreneurial and epistemic goals than democratic
ones. To date, network arrangements have predominantly involved those
with expertise, status or connections. Many of those potentially affected by
decisions such as small-to-medium enterprises, diverse societal groups and
the broader public have not (yet) been included.

The issue of inclusivity is further explored in the discussion on delibera-

tion below.
A clear line of accountability is the foundation the representative
system has relied on for 250  years. For obvious reasons, participants in
governance networks cannot be held accountable for their decisions in
forthcoming elections, and additionally, tracing responsibility for a spe-
cific policy through a system of complex networks is extremely difficult.
Consequently, governance networks need to find other paths to account-
ability, of which metagovernance and inclusion presented above are two
pieces of the puzzle. Esmark (2007: 290–295) identifies two more fac-
tors: (1) publicity (or transparency) implies that the process should be
transparent and all meetings should be documented, while the participants
assume responsibility for their expressed views. In this manner, the whole
process should be public, spurring public debate of the issues handled.
(2) Responsiveness implies continuous communication and interaction
between the participant and the stakeholders he or she is assumed to rep-
resent. Accordingly, responsiveness introduces the representative element
in governance networks, since it is assumed that the number of actors par-
ticipating cannot be unlimited. However, the mandate the representative
receives is not periodic similar to election cycles, but should be constantly

renewed through deliberation, hearings and meetings. Replacement may

consequently occur at any time, as well as a “silencing” of the repre-
sentative in the public sphere. Another difference from the representa-
tive mandate is that it may be adjusted according to the issue handled,
potentially allowing for even more accountability than in representative
Deliberative democracy theory has become central in the field of
democracy theory, marking a shift from traditional voting models towards
“a discourse-centred theory which emphasises the transformative effect
of reason” (Doheny and O’Neill 2010). Deliberative democracy theory
even suggests that a decision process only becomes legitimate through
the deliberation by citizens. Decision-making in a group of people should
occur by means of arguments offered by and to participants who are com-
mitted to the values of rationality and impartiality. The point of depar-
ture for deliberative democracy is the communicative action theory of
Habermas, who argues that emancipation is to be found in communica-
tion free from moral discourses between individuals and deliberative dis-
courses amongst equal citizens (Habermas 1984, 1999). Graham Smith
and Corinne Wales have, based on literature in the field, compiled three
deliberative democratic criteria (Smith and Wales 2000):
– Inclusivity: Every citizen should have the right to participate. As
an absolute minimum, all affected must be given the opportunity
to take part. Special efforts should be made to include margin-
alised groups. Inclusion in the place of representation is viewed as
a tool for reducing political alienation.
– Deliberation: The dialogue in the process must be open and
unconstrained, while the opinions of all participants must be
respected and reflected over in a similar way. The quality of the
discussion is also of importance, meaning that relevant issues must
be discussed with the aim of solving problems. Finally, the design
of the process, such as deciding the agenda, selecting background
information and of participating experts are crucial parts of the
deliberative process.
– Citizenship: The empowerment of citizens through participation
is a fundamental element of deliberative democracy theory, assum-
ing that it leads to improved political interest and a more active
citizenship. In studying the degree of citizenship, scholars com-
monly focus on the level of involvement in deliberative processes,

for instance by measuring the number of participants changing

opinions in a deliberative process. Here, the rationale is that the
confidence of the participant’s capability to influence the process
is important for attitudinal change. Additionally, the possibility
for participants to learn, to perceive new perspectives on an issue
and thereby re-evaluate their opinion is important in this respect.

6.3.2 Constructing Indicators for an Ideal Model

The four essential factors for democratic quality presented above—inclu-
sivity, accountability, deliberation and metagovernance—form the basis for
an ideal model of a governance network, and will be used to evaluate the
planning process studied here. As I have referred to earlier, some of these
ideals have been criticised, especially in planning theory, for not being
realistic or applicable to actual planning practices. There are of course dif-
ferences between policy networks, as the one studied here, and planning
practices, but the process studied does however display characteristics of
actual planning practices. However, I believe that the model provides a
comprehensive picture of the process, determining the level of autonomy,
the relevance of the output of the network, the level of inclusiveness and
legitimacy as well as the quality of discussion. Below, the indicators of the
model are summarised.

1. Metagovernance (Damgaard and Torfing 2011; Hiironniemi 2005)

• The government administration has a unique but not higher position

than other members.
• Self-government of the network vis-à-vis the state, regulation of
• Output: How the dialogue in the expert groups is treated when the
Regional Programme is written.

2. Inclusivity (Dryzek 2007; Smith and Wales 2000; Hiironniemi 2005)

• Participation is open for all citizens in the region.

• Attempts are made to include different interests and all society
• Special efforts are made to include marginalised groups.
• Issue-specific participation, participation according to affectedness.

3. Deliberation (Smith and Wales 2000)

• What information is given and how this is selected.

• Independence of and trust between the members. Respect for each
other and each other’s opinion.
• Unconstrained, open and reasoned dialogue with the aim to solve
problems. Dialogue where the only authority is “the best argument”.
• Decision-making by dialogue. Problem-solving through mutual
• Participants experience participation as beneficial.
• Participation is a learning process for participants and thereby creates
more active citizens.

4. Accountability (Esmark 2007: 290–295)

• Transparency: the network operation is transparent and participants

assume responsibility for their opinions publicly.
• Responsiveness: participants receive and maintain a mandate through
interaction with their constituency/their set of stakeholders.


Ostrobothnia is selected as a case study since it is a diverse and bilingual
medium-sized region, with rural areas and a few urban centres, showing
potential for political conflicts. Additionally, by avoiding the largest regions
in Finland, the risk of large city administrations overriding regional admin-
istration is diminished. Although the structure of the planning process is
very loosely established in legislation, the process described here may be
regarded as a standard model of the Finnish case.
The empirical study is conducted, first, by inspecting documents,
expert group reports and minutes of meetings, and second, by interview-
ing participants. The interviews were semi-structured, covering issues
connected to the ideals of a governance process described above, as well
as questions concerning opinions about the value of the programme and
the position of the Regional Council. Five of the interviews were con-
ducted between the 3rd of June 2009 to the 30th of June 2009, 11 of
them between the 25th of January 2011 and the 11th of February 2011.
In the first round, the group meetings were fresh in the minds of the par-
ticipants, while the second round also gave the participants the possibility

to comment on the output of their work. The interview subjects were

selected with the ambition of covering all expert groups, all society sectors
and types of actors, both experienced and less experienced. Figure 6.1
displays the timeline of the entire process, and here, the meeting of the
working groups early on in the process is the investigated timeslot.
The characteristics of the work processes proved to vary greatly
between the different expert groups, a fact that may be traced back to
the difference in, first, the subject at hand, second, the composition of
participants, which depend greatly on the first point, third, the personal-
ity of the participants, and fourth, whether the participants have previ-
ously prepared similar strategies in other contexts. Consequently, the
process described below must be comprehended as general to the whole
process, not ascribed to individual expert groups. The results are pre-
sented in the next section.


6.5.1 Metagovernance

Self-Government of the Network vis-à-vis the State, Regulation

of Self-Regulation

The planning process is governed through loose frame setting direc-

tives and the discussions are free and uncontrolled. The Council is
free to decide how the planning process should be carried through,
and one official explains that the Council takes account of develop-
ment programmes written at EU, national and regional level, and
thereby fulfils the main intention of the programme, to act as a unifying
plan on the regional level. Of course, the Council cooperates closely
on this issue with the state regional institution ELY, which possesses
the financial means on the regional level. The Council also listens to
ministry requests, as in the case of constructing an expert group for
internationalisation issues. All interviewed participants agree that the
representatives from state regional units did not dominate or control
the discussions in any way. However, the output side of the process
is somewhat troublesome, since the Council solely selects what issues
end up in the final programme. The planning process is realised dur-
ing a short time period without any clarity of how the dialogue should

be implemented in practical decisions. There are problems with the

visibility and validity of the programme, since it has only a visionary
character and the implementation is at the hand of other actors, such as
the ELY-centre.
The Government Administration Has a Unique but Not Higher
Position Officials at the Regional Council describe the planning pro-
cess as a way of “picking up new ideas”. Especially in the writing of the
programme, the Council’s dominance is absolute. Still, participants have
the possibility to give feedback at any time. In the group meetings the
council representatives have in most cases had an unobtrusive position,
kicking off and guiding the dialogue, but still not in a dominating way.
“Everyone got to express their opinion and was respected equally” was a
common assessment in the interviews. Only one interviewee has indicated
that the Regional Council official was too dominant. Another participant
described the planning process by comparing it to open-source computer
software, where all information is available and it is possible for anyone
to give input and improvement suggestions, and the Council acting as a
Group Dialogue in Comparison with Programme Text There is a
wide consent among the participants that the Regional Programme con-
siders the opinion of their own expert groups too briefly, and that the
programme is too imprecise and shows a lack of concretisation. One par-
ticipant suggests that the report of every expert group should be included
directly in the programme, and that it is problematic that the final text is
written by someone who has not got the expert knowledge as the experts
in the expert groups. At the same time, most participants understand that
the programme cannot be specific on all subjects and that it in its current
form has a visionary character.

6.5.2 Inclusivity
Open Participation Regional Council officials indicate that all citizens
have the opportunity to participate in the planning process. However,
this possibility is not communicated openly, and only chosen experts and
stakeholders get a direct invitation. The nature of the selection can con-
sequently be considered a bit arbitrary. Only one participant has been
reported to request participation without an invite. Marginalised groups
taking part by their own engagement is of course not probable.

Efforts to Include All Society Sectors The common division of society

sectors in public, private and civil society is expanded to five sectors, in
order to classify the participants as either regional or state representatives,
and science additionally separated since the inclusion of scientific opinion
is an important factor in deliberative democracy theory. The classifications
are state organisations, regional organisations, business organisations,
science/education organisations and civic society. The actual affiliation
of participants is difficult to judge in some cases, and this classification
must thereby be seen as indicative. Representatives of state regional organ-
isations are classified as state representatives, while public participants of
municipal or regional origin are interpreted as regional representatives.
Business organisations represent the private sector, where private enter-
prise representatives, such as regional development centres and farming
industry organisations, are also included. Civic Society represents non-
government organisations, which also includes (but only to a small extent)
marginalised, less-established groups.
The examination of participation activity has a quantitative approach,
but no exact numbers can be achieved. This estimation is based on actual
participation, i.e. who have participated in meetings and/or written
reports, with “high” indicating a high number of participants and writ-
ten statements, and “low” indicating only a few participants. Of circa 280
invited, about half have participated in practice.
Each expert group is dominated by one society sector or interest, but
for the complete network, it is possible to conclude that the range of par-
ticipating parties is broad and represents all society sectors. In Table 6.1,
no sector is evaluated to have “Low” participation, a judgement based
on the fact that the representation is strikingly evenly spread between the
sectors. Merely the fact that about 140 people have been active in the pro-
cess is impressive. Private entrepreneurs very seldom participate, but they
are still represented through trade associations. According to interview-

Table 6.1 Active participants in expert groups by society sector

High X
Medium X X X X
Business Civic Regional Science/education State
organisations society

ees, when private entrepreneurs participate, they often have a prominent

Locally based organisations constitute the foundation of every expert
group. As seen in the diagram, the regionally based organisations dominate
the planning process. This is in part caused by the fact that the Regional
Council arranges the process and naturally has participants in every group.
About half of the participants in this group represent the Regional Council.
The state organisations, mainly represented by the ELY-centre, participate
in almost every group, as do science and educational organisations. These
three categories are those expected to have good prerequisites for a high
participation rate.
Special Efforts to Include Marginalised (Less-Established)
Groups The Regional Council especially mentions the ambition to
include marginalised groups. Looking at the actual participation, they
have very low representation, which is also recognised by officials at the
Regional Council, who state that “immigrants should be placed in groups
according to what they do, just like other citizens”. It takes more than a
plain invitation to motivate these groups to take part. The inclusion of
sport representatives for this round of planning does however serve as an
example of successful inclusion of an actor previously not considered as a
stakeholder (although sport cannot be considered a marginalised group
per se).
Issue-Specific Participation, Participation According to
Affectedness The composition of the expert groups very much builds
on the idea of collecting participants with the right kind of knowledge
for the issues handled, and can accordingly be described as issue-specific.
For example, the Culture group is dominated by Civic societies, such as
art and culture representatives. On the other hand, the level of inclusion
of affected actors is difficult to judge, but since the planning process was
a closed process, not engaging in public debate, deficiencies are probable.

6.5.3 Deliberation
Information The ambition of the Regional Council has been to collect
relevant programmes from all levels of government and society sectors.
Respondents in the interviews agree that the amount of information given
has been sufficient. The planning process started with a kick-off semi-
nar where background material and the intention of the process and the

programme were presented. Regional Council representatives chairing the

expert groups presented additional information as a foundation for the
discussion. Central for the process has been the production of expert opin-
ions and reports by the participants.
Independence of, Trust and Respect Between Participants The
trust and respect between members and members’ opinions are
unequivocally excellent. No participant has expressed complaint on
this matter. All parties were treated in the same way and all had an
opportunity to state their opinion. However, a core group always
forms in the groups, with resourceful participants: “the participants
regarded as prophets on the subject are always dominant”, as one
participant put it. Authorities often have more resources to partici-
pate, but many participants especially pointed out that they did not
dominate the meetings: “many participants were pretty quiet, but the
authorities did not dominate. It was a question of personal qualities,
not status.” When participants recited dominating parties, all types of
organisations were mentioned, with private enterprise representatives
and researchers in important positions.
Unconstrained, Open and Reasoned Dialogue with the Aim to
Solve Problems All interviewed participants describe an open, uncon-
strained dialogue. Some complain that sometimes the discussion has
drifted away to irrelevant issues, but in general the discussions have been
substantive and with a clear objective.
Decision-Making by Dialogue, Problem-Solving Through
Mutual Understanding The Internationalisation group, which was
new for this round of planning, used the Logic Framework Approach,2
which allows each participant to highlight problem areas within the
discussed field, and the structure of the subsequent discussion are then
based on these assessments. This method was described by one partici-
pant as “brainstorming”, and another participant experienced this pro-
cess as “very democratic”. The discussion was steered to relevant issues
and allowed all participants to have their say. In other groups, the work
built upon existing material, mainly the previous programme work. As
the core of people of the groups has not been altered, not many new
ideas surfaced. Therefore, few meetings were needed before the call for
papers. The group’s statement was written on the basis of these papers
and later accepted by the participants in the group. It is near at hand to

suspect that the rapidness of the process questions whether for example
new participants were regarded equivalently to those who have reached
an agreement in the past. The ambition of the Council is good, but
participants complain that too few meetings are arranged, and that
some issues have not been sufficiently discussed. Many groups indicate
that they have reached consensus, but as a consequence of the abstract,
visionary character of the programme, in some cases there was no need
to agree on particular details. Some groups did contain antagonistic
elements, but in these, the conflicts were avoided, as in the case of the
location of healthcare services.
Participants Experience Participation as Beneficial, as a Learning
Process and Activating Citizens Unquestionably, the participating
actors all experience the work process as rewarding, both for expanding
their cooperation networks and for the understanding of other parties’
point of views. Participants are also satisfied with getting the oppor-
tunity to express their point of view, their organisation’s preferences
or the wishes of their subregion. The understanding of the region as
a common enterprise improved, as one participant representing an
NGO pointed out: “through this work, I recognized how important
the region is to our activities. This kind of programme must be done.
It reinforces the sense of belonging together.” The uncertainty of the
status of the programme, its abstract character and the risk of doing
work without result makes some participants wonder if the Regional
Council can motivate people to take part in the future.

6.5.4 Accountability
Transparency The planning process is transparent, meeting protocols
are available and it is possible to trace back the source of the pro-
gramme text to individual expert groups. As Fig. 6.1 shows, there are
opportunities for the public to participate, through the public seminar
for instance, but since the planning process mainly consists of a closed
discussion within the expert groups rather than a public debate where
the participants assume a mandate for his or her views, the level of
publicity can be put into question. Later on in the article, two cases
will be presented where media is used to engage a public debate, to
contrast the process studied here.

Responsiveness Participants are for the most part representatives of

organisations and affected interests and in that way constitute responsive-
ness to a constituency. However, the accountability and adjustability of
mandates can be put into question in a rapid process like this one.

6.5.5 Evaluation of the Democratic Quality

In order to present the results in a comprehensive way, the indicators are
each estimated to comply in high, medium or low degree with the ideals.
Low means that there is no compliance at all with the ideals, medium that
the ideals are partly fulfilled and high that there is full or near full compli-
ance. Of course, this judgement is only suggestive, but still offers a rough
picture of the democratic quality of the process. These results are visible
in Table 6.2.
Most indicators fall into the medium category, and on the whole,
the compliance with the ideals seems to be fairly good, with only one
indicator showing low compliance. The very high compliance with
the deliberative ideals is especially striking, indicating a qualitative
discussion climate. At the same time, the low score on inclusion of
marginalised groups was an expected result; unorganised actors with
low capacity are difficult to find and engage in these kinds of mat-
ters. The same goes for private entrepreneurs, who generally need
to see clear and swift benefits of their time spent. Another expected
result is that some participants have been more dominant than oth-
ers, based on their superior knowledge, experience and possibility to
devote themselves to the task. The planning process is very much a
regional affair and the dialogue in the expert groups is free from con-
trol, but there are complaints on how the programme is written, since
the participants feel that, while specific issues have been discussed in
the expert groups, the end product has only a visionary and unspecific
character. Additionally, participants feel that some of their work is
wasted and would want a say in what issues are selected as important
and not only rely on the Regional Council on that matter. Still, the
participants appreciate the planning process as an important platform
for joint development on the regional level.

Table 6.2 The planning processes compliance with theory ideal

Compliance with ideal

Theory indicators Results High Medium Low

Meta-governance Self-government Frame setting, but free. x

vis-à-vis the state Implementation
Government unique Not higher position, x
but not higher position absolute authority in
compiling programme
Dialogue in Brief and imprecise, yet x
comparison with most participants
programme text satisfied
Inclusivity Open participation Open in principle, not x
openly communicated
Attempts to include All sectors represented, x
all society sectors unsuccessful efforts to
include private sector
Marginalised groups Good ambition but x
insufficient result
Issue-specific Participation issue- x
participation, specific, but
according to affectedness
affectedness. questionable
Deliberation Information Information central in x
the process
Independence, trust, No complaints from x
respect participants
Unconstrained, open, No complaints from x
reasoned dialogue participants
Mutual Overall good, but x
understanding process too rapid
Learning experience, Increased interest and x
activate citizens beneficial for reaching
new understandings
Accountability Transparency Transparent, but in x
practice secluded
Responsiveness Constituency x
involvement, but


As we have seen, the case study displays a fairly high compliance with the
democratic ideals. This is especially true regarding the deliberative indica-
tors, but here we need to remember the criticism these ideals have received
for neglecting the very nature of political conflicts, as stated by Mouffe
(2000) for instance, who imply that there often is not an all-satisfying
solution available to political conflicts. The democratic performance of
governance networks has been a central issue in governance theory (Pierre
2000; Hajer and Wagenaar 2003; Sørensen and Torfing 2005; Sager and
Ravlum 2005), but still, the significance of the pronounced relevance
of the output of the network to this performance has been somewhat
neglected. The suggestion put forward here is that the relevance affects
the democratic value of the network. The suggestion put forward is the
following: as long as the network is not regarded as the arena where deci-
sions are made, its democratic contribution will not be fulfilled. During
field work, in discussions with regional actors, the definite relevance of
the output of the studied network became the key point when trying to
understand its democratic qualities.
By legislation, the position of the programme is unquestionable:
it should be the leading strategy document on the regional level. Still,
in practice, its position is highly ambiguous, especially due to the fact
that the Regional Councils do not have any financial means to imple-
ment it—the actual importance of the programme is consequently at the
discretion of key national and regional actors. Since the writing of the
programme, one of the Regional Council officials interviewed has started
working for AVI, one of the two state regional organisations, and has
consequently been able to see the programmes status out of a completely
different perspective. The official found that the programme had little
significance for officials working at AVI, even being described as a “side-
track”. Unmistakeably, this statement indicates persistence of a top-down
way of thinking among state government officials, especially remembering
the fact that this approach is contradictory to legislation. The ambiguous
position of the programme is visible throughout the interviews, raising
the suspicion that the actors would have behaved in another manner if the
programme had distinct relevance. Inevitably, the score of the democratic
indicators would have been different, especially regarding the quality of
discussions. One Regional Council official explained that “the programme
is an important contribution to the development direction of the region,

but it is not the big process – to correspond to this ideal would require
a much more rigorous process”. This is due to the fact that a visionary
programme cannot take account of the structural character of budget leg-
islation and the manner it ties up resources. The expert group for Welfare,
for instance, did not even aim at reaching consensus on all matters, such
as the actual placement of healthcare services. In such a case, the delibera-
tive ideals would certainly have been contested in a different manner. One
of the participants in the expert group accordingly stated that “it (the
programme) is written in general terms, the conflicts aren’t dealt with”.
The “democratic windows”, the opportunities where the public are
allowed input (visible in Fig. 6.1), are delimited to the planning process
of the expert groups and the period when the programme is put on pub-
lic display. At the end, public administrators write the programme and
elected politicians approve it. Undoubtedly, the Assembly of the Regional
Council will have a hard time familiarising themselves with all of the wide
range of topics discussed in the expert groups, and as a consequence, it is
vital that the planning process in itself is functioning in accordance with
the democratic values as described above. The Regional Council compre-
hends the participative process as a way of picking up ideas rather than
a system for achieving accountability for the programme. In governance
network theory, on the other hand, the virtue of these kinds of processes is
said to consist of both improved efficiency through inducing local knowl-
edge and improved democracy through inclusion of stakeholders.
The finding of this study is in line with the conclusions by Bäcklund
and Mäntysalo (2011), who have stated that participation processes are
inserted on top of the comprehensive-rationalist model without mind-
ing the implementation. In the long run, there is an obvious risk that the
whole process loses its legitimacy. One participant, representing business
interests, illustrated this point by stating that “it is crucial for the legiti-
macy of the programme that organisations and businesses working in the
field of action participate and give their point of view”. Naturally, if par-
ticipants perceive that their effort is lost in the system, they will certainly
hesitate to participate in the future. In order to achieve a broad inclusivity
in the future, the relevance of the programme is fundamental.
The relevance is influential on most indicators:
– The influence on the metagovernance indicators is substantial, but
in what direction these indicators would be pushed is a matter of
how the governing body responds to the altered circumstances.

– Concerning transparency, when decisions become increasingly

relevant, the planning process is expected to become more inter-
esting for both mass media and the general public, which in turn
incite public debate about the issues discussed. As to responsiveness,
it is close at hand to assume that when the relevance is definite,
affected actors become aware of the network and consequently
want their opinion to be heard. By this, the mandate of the par-
ticipating actors is challenged and will more likely be adjusted.
– A heightened relevance incites participation and in that way inclu-
sivity is improved. When a collective regional development plan
becomes a part of the public mind, the inclusion of affected actors
is certainly raised.
– The deliberative ideals are very well satisfied in the studied pro-
cess. When the planning process is clearly linked to the phase of
implementation, and tender, urgent issues must be decided, the
quality of discussion and the respect between the actors will cer-
tainly be challenged. This is the point where the relevance has
the most apparent influence, and this fact contests the use of the
deliberative target of consensus in policy planning.

6.6.1 Are the Theories of Governance Networks Deliberative

Democracy Compatible?
Deliberative democracy has become an influential concept when new
forms of democratic conduct are pursued. As we have seen, this is espe-
cially evident in planning processes, as well as through the incorporation of
the concept in governance network theory. While deliberative democracy
finds its origins in Habermasian idealism, governance network theory is
influenced by realism and even corporatism. In this sense, governance net-
works may be regarded as the democratisation of the ruling of expertise.
Bearing in mind the origin of the two concepts, the actual compatibility of
these might be questioned, and when considering the impact of relevance,
this compatibility actually becomes a crucial point. Since planning pro-
cesses often involve rights fundamental to the liberal democratic system,
such as land-ownership, free enterprise and individual rights (Mäntysalo
et al. 2011: 2121), there is an obvious incongruity with the deliberative
equality ideals.
The general conclusion of the empirical material is that the delibera-
tive ideals are challenged only when decisions receive definite influence.

This is a reasonable conclusion, since the deliberative concept sees planning

groups as platforms for reaching consensus about the most rational and
“good” solution, and thereby ignoring the political aspect of the process.
Sørensen (2010: 7), on the other hand, advocates that the planning pro-
cess should be comprehended as “a political battleground in which differ-
ent political forces struggle to convince others of their particular versions
of what is to be perceived as reasonable and rational”. The rationale here
is that participants debating issues concerning themselves are expected to
bring with them a certain amount of emotion, passion and conviction,
along with some personal qualities, such as authority and rhetorical skills.
Complete equality of actors cannot be expected as a consequence, and the
quality of discussion is limited to the respect between actors and a willing-
ness to persuade and be persuaded. While the deliberative ideal of consen-
sus seems somewhat maladjusted in this context, the agonistic ideals of
allowing disagreements and the concept of adversaries appear to be more
suitable to planning practices, as Mäntysalo et al. (2011) have suggested.

6.6.2 Imagining a Planning Process with Relevance

The issue of relevance challenges the very fabric of the politico-bureaucratic
system of liberal democracies. Overcoming the obstacle of a top-down
system is difficult, and the end result is often planning processes acting as
idea generators rather than decision-making devices. Still, there lies a great
potential in such processes, especially regarding legitimacy and allowing
the use of local knowledge. Relevance and democratic ideals of inclusivity,
transparency and accountability may actually be reciprocal occurrences:
when relevance is definite, you may expect more public debate and more
people wanting to take part and holding participants and implementers
accountable. The difficulty of including marginalised groups remains,
however, implying that raised relevance is not the only pertinent param-
eter here. Still, finding an operational model for a relevant planning pro-
cess is desirable, and for the purpose of aiding this search, two interesting
Nordic examples will briefly be presented.
The first example is the Swedish region of Västra Götaland. Here,
special emphasis was put on the implementation phase of the regional
strategy, even by forming a special organisation for this task. Regional
actors and politicians were engaged through annual seminars, where polls
where presented regarding public opinions on the regional vision and on
regional development generally (see Elmkvist 2011; Ernstson et al. 2011).

Additionally, efforts were made to further engage the public, for instance
by presenting the regional vision through a special appendix in the local
newspaper. The implementation phase was monitored by an indepen-
dent panel of representatives of industry and universities, at the same
time as a special vision-secretariat received the task to continuously pro-
vide politicians with relevant information for realising the vision (Västra
Götalandsregionen 2005, 2008).
The city of Tromsø in northern Norway forms the second example (see
Nyseth 2008). The participative process was initiated in the town due to
strong public opposition to a new area plan, and the city administration
responded by proclaiming a “City development year”. The general aim
was to include experts and actors not commonly participating in plan-
ning practices in order to receive new perspectives and ideas. A network
was assembled with the specific objective of encouraging public debate on
urban planning by comprehensively presenting several alternative plans.
Every Saturday, the network published an article on urban planning in
the local newspaper. Public seminars, workshops and conferences were
arranged, as well as city walks, where different development strategies
where featured on site. A city exhibition drew special attention, where
models of various development alternatives were presented visually. The
exhibition was well attended and easily accessible to the public. The “City
development year” succeeded in engaging the public in the development
of the urban environment, raising awareness, bringing forward new ideas
and thereby improving the legitimacy of the forthcoming area plan.


Planning practices in Finland primarily use participative planning pro-
cesses for picking up ideas and for receiving legitimacy for the planning
documents from key actors. Accordingly, the process studied here reveals
an immature system incapable of making use of the acquired knowledge,
leaving the compilation and selection of issues to a few public administra-
tors. Additionally, the study illuminates the incongruity of the deliberative
ideal of consensus in a process where actual decisions are to be made.
Still, deliberative theory does offer a valuable contribution to governance
network theory as far as adding the virtues of argumentation quality and
pointing out difficulties with elitism and inclusion. The agonistic ideal
of Mouffe (2000) does however seem to make a better fit with decision-

making processes, paying respect to the different values of participants and

that consensus may not always be achievable.
The difficulties representative democracy faces are well known.
Deliberative democracy and governance networks may be comprehended
as tentative solutions for these difficulties. While governance networks are
broadly used in order to receive knowledge of local specificities invisible to
central government, their difficulties of incorporating them in the prevail-
ing system are apparent. At the same time, there are also important virtues
visible, since the processes are well appreciated as a forum for enhancing
the understanding of other perspectives and as a way of raising the aware-
ness of the region as a common enterprise. A difficulty is the engagement of
the public, which is evident in a very low feedback rate to the programme
proposal. In comparison to the Swedish and Norwegian cases presented in
the previous section, there seems to be a need for presenting the regional
programme in a more visible fashion in the Ostrobothnian case. Keeping
in mind that handing complete decision power to a governance network
would require a complete reformation of the politico-bureaucratic system,
the suggestion put forward here is that the relevance may be enhanced by
raising publicity, which in turn may improve democratic virtues such as
inclusivity and accountability.

1. The topics of the expert groups included culture, competitiveness, rural
development, logistics, information society, welfare, prognostication of
education, environment, internationalisation, regional structure and rural
2. Logic Framework Approach (LFA) is a management tool mainly used in
the design, monitoring and evaluation of international development proj-
ects. The method allows each participant to define problems in the dis-
cussed theme. A selection process follows, where the issues are chosen and
collected into groups. Finally the group tries to find solutions and develop-
ment paths for the selected issues.

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Region Västra Götaland.

Is There a Need for Transnational Learning?

The Case of Restructuring in Small
Industrial Towns



Finland and Norway are territorially large but sparsely populated countries
with a relatively large amount of peripheral and geographically isolated
small industrial towns depending on one or a few industries, often based
on natural resource extraction. The vulnerability of these towns is obvi-
ous, and they are accordingly often referred to as one-company towns or
one-generation towns. The focus of this section is the restructuring poli-
cies in these two countries, and specifically, the Norwegian model will be
treated as an ideal, while the town of Kaskö and the region of Southern
Ostrobothnia will form the case study in Finland. The case of Kaskö is an
outlier also in the Finnish case, displaying a failed regional restructuring
system. Therefore, the case reveals deficiencies in the Finnish restructuring
system, and the potential for transnational learning is consequently appar-
ent. There are three main reasons why the restructuring efforts failed in

Originally published in Mariussen & Virkkala (2013) Learning Transnational

Learning, pp. 285–310 Routledge.

© The Author(s) 2017 157

K. Nordberg, Revolutionizing Economic and Democratic Systems,
Palgrave Studies in Democracy, Innovation, and Entrepreneurship
for Growth, DOI 10.1007/978-3-319-40633-6_7

• The company displayed a reluctant attitude to restructuring measures.

• Language and cultural differences obstructed regional cooperation
with regard to economic development (mainly the construction of a
common regional business development agency).
• While Kaskö suffered, the surrounding region was prosperous, which
partly stopped national restructuring funding.

Norway and Finland share a common Nordic heritage and are con-
sequently similar in many respects. Still, regarding characteristics highly
relevant for restructuring efforts, there are significant differences. In par-
ticular, Norwegian regional administration has for a long time been based
on self-governing entities, while a similar structure in Finland started
to evolve only two decades ago. The Norwegian structure has enabled
a regional restructuring organisation that has no equivalent in Finland.
Kaskö in Finland is a truly peripheral and small town, located at the south
tip of the region of Ostrobothnia, about 100 km away from the regional
centre. After a prosperous period of three decades, the town lost its pulp
mill, which had employed 400 of its 1400 inhabitants.
Kaskö represents a case where regional cooperation related to devel-
opment has largely failed. The purpose of including this study is to
draw attention to some crucial elements in institutional structures and
in national legislation for restructuring possibilities through participative
forms of governance. This section now continues with a brief outline of
restructuring systems in Finland and Norway. Then, the administration
systems in the two countries are explained, followed by a detailed descrip-
tion of Norwegian restructuring policy. In section four, the Finnish system
as well as the case study is presented and examined. In the fifth section,
the Norwegian ideal is compared to the case study, and conclusions follow.

7.1.1 Path Dependency and a Brief Outline of the Norwegian

and Finnish Systems for Industrial Restructuring
As this study will demonstrate, the power relation between the national
system and local actors is important to understand when studying a
restructuring effort similar to the case study. Bob Jessop’s SRA is useful
for aiding this understanding (Jessop 2008). Jessop comprehends state
systems as being formed by sets of actors who create long-term strate-
gies, and these strategies in turn form the structure of the national sys-
tem. The structures act as selection mechanisms approving or denying

suggestions for change, and in this manner, the national system forms path
dependencies favouring or disfavouring certain actors, activities or strate-
gies. National systems are of course not completely static, and therefore,
change is induced through adaptation of the individual actor’s identity
or interests according to perceived deficiencies of the system, and when
these alterations coincide between alliances of actors, sudden change may
occur. Regarding industrial restructuring, the administration system,
development grants, territorial borders, regional traditions and culture are
factors forming path dependencies, affecting restructuring possibilities.
Consequently, these are important factors when attempting to transfer
restructuring measures between countries.
In Norway, the mountainous terrain and scattered natural resources
have rendered a large amount of inaccessible towns, and as a consequence,
the country has had every reason to construct a system for maintaining
these settlements. Since the early 1980s, a system for long-term economic
restructuring has been developing for this purpose. The system builds on
the simple notion that the regional industry must be diversified through
long-term restructuring rather than through short-term crisis-based
efforts. The system resembles governance networks, since actors from all
society sectors are engaged in the effort. The aim is to achieve a com-
mon understanding of the risk of situations that can occur in the future,
rather than crisis-based interactions. Reaching agreements of measures for
the future without the incentive of an immediate threat requires a dif-
ferent level of dependability between actors and an understanding of the
region as a common affair. Experiences of over three decades of long-term
restructuring gave rise to special restructuring legislation in 2008, called
“Omstillingslova”, obliging the concerned company to assume social
responsibility for the community it is acting in.
In comparison, the Finnish restructuring policy displays a stronger
market-led characteristic. One instance of this is the manner in which
the financial crisis of the 1990s was handled; the primary response was
heavy investments in the emerging ICT industry (see e.g. Ornston and
Rehn 2005). The strategy was successful as far as it stimulated a fast eco-
nomic recovery, especially owing to the booming success of Nokia, but
at the same time, growth was confined to a few growth centres while
long-term unemployment proceeded in other regions, since the skills of
the traditional branches did not meet the requirements of the ICT sector.
This long-term unemployment still lingers on in Finland, two decades
afterwards. In 2010, the long-term unemployment number was 2  % in

Finland, while the corresponding figure in Norway was only 0.035  %.

The assumption is that the Norwegian strategy of supporting continuous
restructuring and engagement on a regional level is one explanation for
these divergent figures.



The structure of public administration is an important variable for this

study since it relates strongly to the possibilities of mobilising regional
restructuring efforts. Norway and Finland share the same Nordic legacy
in public administration, displaying typical characteristics of unitary states.
The municipal governing bodies are strong in both countries, but the
regional structure is somewhat weaker in the Finnish case. In this section,
the arrangement of regional affairs will be described in both countries,
including the characteristics of the regional administration systems and
regional development strategies.

7.2.1 Norway
The current regional governing bodies in Norway, 19 counties (called
fylken), were established already in the early centuries of the last millen-
nium. To a large extent, the territories of these counties have remained
unchanged over several centuries. The counties have traditionally been
subordinate to the municipalities, but in 1976, their authority increased
considerably when a separate county administration was established, pow-
ered by direct elections and a separate county tax (NOU 2000: 137–41;
Bukve 2008: 19). These counties now were assigned the task of carrying
through county planning, among other things. The free municipal experi-
ment (frikommunforsøket), carried out in 1987–1992, allowed 6 coun-
ties and 20 municipalities to develop autonomous development strategies,
and this experiment raised awareness further for the benefit of autono-
mous regional policies, and resulted in new political and administrative
routines in the counties, concerning e.g. strategic planning (Grindheim
2004: 59–60).
However, during the last two decades, the authority of the counties
has weakened considerably through several transfers of responsibilities,
mainly to state regional bodies. This has paradoxically happened during a

period when the public debate has emphasised the importance of counties
as leading organisational structures in regional development. The posi-
tion of the counties decreased even more significantly in 2002, when the
counties lost responsibility for health and social services, which had occu-
pied 61 % of the county budgets (Grindheim 2004: 61). After this major
reform, the remaining responsibilities were regional planning, regional
development, secondary schools, public transportation, social welfare
and cultural services (Grindheim 2004: 68). The tradition of centralised
rule is visible in the form of 40 state agencies and state county gover-
nors, performing supervisory tasks. Additionally, the county authorities
are sector-specifically subordinate to the ministries on a functional basis
(Bukve 2008: 18).
Centralisation trends are also visible in business development funding.
In 1997, the responsibility for the allocation of business support mea-
sures was transferred from the counties to state regional offices. Since
2003, these state regional offices are directly subordinate to Innovasjon
Norge, a state regional organisation with the responsibility of developing
state districts and business innovation on a regional level. Despite los-
ing many governance tasks, the counties have kept the responsibility for
regional development through the Regional Development Programme
(Regionaltutviklingsprogram, RUP, established in 1995). Through RUP,
the counties in effect control the allocation of development funding to
the implementing bodies Innovasjon Norge, the municipalities and the
Agricultural Development Agency. The local and regional planning pro-
cess also involves County Plans (Fylkesplaner) and Strategic Business Plans
(Strategiske næringsplaner, SNP), which set up goals and strategies for
the development of the community and the local business policies respec-
tively. While these latter plans are visionary strategies, the RUP focuses on
actions that are to be implemented in the near future. The programme is
developed by gathering a network consisting of the county council, state
regional agencies, municipalities, business organisations, educational and
research institutions, amongst others. Through RUP, the counties main-
tain a central position as a coordinating body of business development
efforts in its region (Leknes 2002).
Although Norway is not a part of the EU, the procedure of generat-
ing a common regional development programme is certainly influenced
by the regional agenda of the union. Regarding funding, a study made in
2004 investigating the budgets of three counties (Grindheim 2004: 67)
showed that the funding of RUP mainly consisted of allocations of state

resources. However, Grindheim concludes that the internationalisation

of the economy has somewhat strengthened the counties in this regard
(Grindheim 2004: 72). Still, the Norwegian regional system is divided in
the sense that funding belongs to state agencies while the writing of pro-
grammes is a regional matter.

7.2.2 Finland
In comparison to the Norwegian counties, the regional system in Finland
is a recent construction, formed during the last two decades. Historically,
there has not existed a locally tied regional structure in Finland, and
instead, the municipalities have owned taxation rights and been assigned
extensive responsibilities for the arrangement of services (elementary edu-
cation, health care etc.). Regions have existed merely as State Provincial
Offices, dating back to the seventeenth century. In 1831, 12 provincial
offices were formed, and this regional setup was largely left untouched
until extensive reforms commenced in the 1990s (Westerlund 1989).
The need for a regional administrative reform was brought to the fore
by the eventuality of an EU membership (finalised in 1995), since the
Structural Funds of the union unconditionally required locally commit-
ted regional bodies, and such bodies simply did not exist at the time.
Due to political circumstances, regional autonomous organisations could
not be formed, and instead, municipal cooperation bodies, the Regional
Councils, were established as the receiving unit for EU structural funding,
while also assuming responsibility for regional development and land use
planning. A bit paradoxically, the state regional organisation ELY today
manages the EU funding, although the Councils are the official receiv-
ers. Simultaneously, the state regional administration underwent a similar
restructuring, dismantling the system of Provincial Offices and forming
new state regional agencies. In 2010, a second reform merged these agen-
cies into two organisations: AVI, handling permits and legal rights, and
ELY, owning responsibility for promoting regional competitiveness, well-
being and sustainable development, and for managing the regional imple-
mentation and development tasks of the state administration (Ministry of
Finance 2009). For restructuring efforts on the regional level, ELY is the
organisation of interest.
The regional structure for regional development that has emerged
consequently consists of Regional councils possessing responsibility for
regional development, while funding is mainly handled by the ELY-centre.

According to the Regional Development Act from 2009 (1651/2009),

the government and the municipalities are both responsible for regional
development in Finland today, in practice implying the Regional Councils
and the ELY-centres. The ELY-centre is also responsible for a functional
labour market (897/2009 3§) and organises business support and labour
market services on a regional level. The Regional Councils direct regional
development by writing programmes: long-term visionary programmes
(the Regional Scheme), four-year development programmes (the Regional
Development Programme) and one-year implementing plans. The Scheme
and the Development programme are prepared by inviting regional actors
representing all society sectors, while the annual implementing plan is pre-
pared by Regional Management Committee, a regional body under the
Regional Council, in a similar manner consisting of private, public and
civil sector representatives. In legislation these programmes should be the
leading strategic documents on the regional level, but since the Regional
Councils lack the means to implement them, their relevance is indefinite.
Regarding national funding possibilities, the TEKES may be regarded
as the equivalent to Innovasjon Norge in the Norwegian case. Both are
coordinated by national bodies, but while the Finnish funding agency
mainly operates in a top-down fashion, there is a stronger regional ele-
ment to funding decisions in Norway. During the time of the restructuring
measures studied here, there were two national development programmes
of interest: The Regional Cohesion and Competitiveness Programme
(COCO) and the OSKE. COCO was a programme coordinated by the
state government, funding subregional development projects aiming at
raising regional competence and profiling. OSKE is similarly a state gov-
ernment coordinated and financed programme, aiming at promoting the
utilisation of knowledge and raising regional specialisation and coopera-
tion between centres of expertise. The structural funds are of course also
relevant in the context of this study, and here, during the 2007–2013
period, regional competitiveness, specialisation, employment, innova-
tion networks, know-how structures and accessibility were mentioned as
important focus points in the funding strategy.


The Norwegian restructuring policy is treated as an ideal model here,
implying that restructuring efforts necessarily do not correspond to the
policy presented here. Still, when researching industrial restructuring

policies in small, geographically isolated one-company towns, Norway

offers a good place to study. In Norway, industrial clusters have been
built on the basis of having access to natural resources—mainly fish, for-
est, ore, farming products and, not least, hydropower. This concentra-
tion of industry around natural resources, together with the Norwegian
tradition of emphasising the importance of locality in the regulation of
business, entailed an emergence of a large variety of one-company towns
(Mariussen 1996: 10–11). In the wake of the economic recession in the
1970s, “Buvik-utvalget” identified 104 small industrial towns spread all
around the country. Buvik-utvalget, an official report of the Norwegian
state (NOU 1983), to a large extent forms the basis for the restructuring
policy which presently operates in Norway. Buvik-utvalget marked a turn-
ing point in the change from crisis-based interventions to an approach
based on long-term strategies. The question posed by Buvik-utvalget was
how the employment situation could be improved in these small and eco-
nomically declining peripheral towns.
In the 1970s, Norway, similar to other countries, experienced a decline
in their until then steadily growing economy as a result of the Second
World War, and the aim was to meet the challenges of the crisis by sup-
porting weak companies, with the hope of improving the economic sit-
uation. On the other hand, Buvik-utvalget steered the development of
restructuring efforts away from this kind of strategy. The notion of crises
as a result of economic fluctuations was rejected and instead it was argued
that they were caused by the fact that one-company towns relied on only
one business branch, and sometimes even just one company (Mariussen
and Karlsen 1997: 4).
A market-led restructuring policy was a popular method for con-
fronting the crisis in many Western countries in the 1980s, especially in
Great Britain. The idea was to allow declining companies to take care
of themselves, and to expect increased foreign investments and a rise in
entrepreneurship as a result of the workforce that was made available as
a consequence of closedowns in the declining industry. Instead, Buvik-
utvalget argued that the small and peripheral towns in Norway were
not attractive to outside investment, nor was labour less expensive than
anywhere else. The circumstances were simply different in Norway, and
Buvik-utvalget feared that many small towns would diminish with the
enormous infrastructural and social costs the relocation of a community
would cause. Buvik-utvalget raised concern for the survival of the town
rather than for supporting the cornerstone company. As opposed to the

market-led approach, this was a collaborative answer to the economic

challenges (Mariussen and Karlsen 1997: 6). Looking at the state of the
global economy today, 30 years later, increasing globalisation has further
amplified the competition for investment and cheap labour.
Buvik-utvalget pushed for the measures to be focused on converting
the activity of the cornerstone company towards a more diverse economic
setup in the town. This would then be accomplished over a long period of
time through a broad planning effort involving regional actors from both
the private and the public sectors. However, such a long-term effort is
not easy to achieve. For example, one aggravating circumstance is that the
cornerstone company in a one-company town often gives rise to norma-
tive control, where small businesses representing other business branches
have difficulties establishing themselves in the community. Usually, the
small companies that emerge act as subcontractors for the cornerstone
company, or in any case are closely linked to its activities. Furthermore,
also the cornerstone company is interested in preventing the establish-
ment of competing industries, because of the competition for labour. At
the same time, the community often attempts to protect and maintain the
existing structure because of the security it offers and often many of the
public services are designed to suit the needs and character of the corner-
stone company. These circumstances often easily cause the community
to suppress warning signs of a sharp decline of the cornerstone company
(Mariussen and Karlsen 1997: 8).
Long-term restructuring strategy is an altogether completely differ-
ent approach to industrial restructuring than crisis-based interventions.
While crisis-based interventions are rapid responses to company shut-
downs, long-term strategies are outcomes of a shared understanding of
the vulnerability of the location, involving the whole community in con-
tinuous restructuring. Long-term interventions are demanding due to
the simple fact that broad participation and accountability for situations
that can occur in the future are difficult to achieve. In effect, the same
sort of awareness a crisis inflicts must be achieved in seemingly pros-
perous times. Consequently, the possibilities for achieving long-term
restructuring strategies depend on the ability for reflection on future cri-
sis occurrences. Still, this demanding effort seems to be able to find its
way through discussions on restructuring needs among regional actors,
and this continuous networking activity is expected to raise the aware-
ness of the economic development of the region throughout the commu-
nity (Karlsen and Lindelöv 1998: 14). Karlsen and Lindelöv (1998) have

demonstrated that Buvik-utvalget implied a shift of paradigm in indus-

trial restructuring in Norway, with evidence of a significantly decreasing
amount of crisis-based interventions since the 1980s, while the grounds
for resource allocation in the 1990s were predominately connected to
situations that can occur in the future. The authors suggest that this
shift is a result of an understanding at the regional and local level of
the value of getting ahead of crisis. Still, long-term restructuring does
raise demands for broad regional participation, accountability and legiti-
misation. Karlsen and Lindelöv (1998: 26) see three important factors to
focus on for being able to handle these challenges:

• Continuous communication allows participants to understand and

accept the transition from idea generation to selection of ideas.
• The different phases (strategy, planning and implementation) must be
tightly anchored to each other. To achieve this, participants must be
engaged in all phases of the process, and at the same time provide
continuous feedback.
• Restructuring must operate as a partnership, not relying on the
restructuring organisation alone.

Karlsen and Lindelöv have summarised the Norwegian restructuring

policy in five phases (1998: 17–26), as recaptured below.

1. The scanning process

The initial step may be described as a bargaining game between the munic-
ipality and the government authorities concerning funds for restructur-
ing. The distribution of funds depends on whether the municipal agents
can convincingly describe the requirements for the restructuring of their
municipality. The individual skills of the Chairman of the municipality are
crucial, since this person often becomes the public face of the restructur-
ing process.

2. The mobilisation process

The mobilisation process should involve all types of local actors. All sectors
of society should be represented in order to achieve consensus, in order
to enhance the sense of involvement in the community and in order to
achieve collective brainstorming with regard to the economic development

of the municipality or the region. A successful process of mobilisation cre-

ates a sense of project ownership for the participants. The process must
be idea-generating and it must have a legitimising function. The process
of restructuring thereby receives legitimacy by virtue of its character as a
democratic process.

3. The planning process

The planning process is in effect an integral part of the mobilisation pro-

cess. Out of the ideas and proposals produced in the mobilisation, a num-
ber of industry branches and projects are selected to be focused on, after
which they are connected to a solid support base made up of industry
representatives. Ideally, the process should be communicative, with par-
ticipants being aware of the need for compromises and of the fact that not
all projects can be effective. Thus, an action plan is developed based on the
Strategic Business Plans (SNP).
The planning document easily becomes just a means to obtain funds,
i.e. the communicative process disappears. The plan thereby ends up being
little more than a wish list, and when the plan is converted into reality,
room for interaction must be allowed. A long period of time is required
for consensus to be reached and an operational network involving key
players in politics, business and organisations is also necessary.

4. Establishment of the restructuring organisation

Establishing a restructuring organisation in practice implies that the deci-

sion be made in the location that has been granted responsibility, usually a
special business development agency. Placing development responsibilities
outside the municipal administration is motivated by the often paternalis-
tic role of the cornerstone company in the small community. In addition,
in terms of resources a small town has limited possibilities to sustain such
an activity. A separate organisation also provides greater discretion, deci-
sion efficiency and professional autonomy as a consequence of democratic
processes being left outside of these matters. This can of course be prob-
lematic from a democratic point of view and consequently, some kind of
representation would be preferable.
Another common complicating factor is the business tradition of confi-
dentiality and of making rapid decisions, the consequence of this being the
often closed discussions that the public is unable to take part in. However,

because of the competitiveness of business organisations in Norway, this

is considered legitimate, even though it does not meet the requirements
of a communicative and democratic process. Consequently, there is a limit
to how much of a closed process is allowed, and it is important that the
municipality is involved in the development work.

5. Operation

The strategies and objectives agreed upon should guide the operation of
the restructuring process. The business development organisation should
select and support projects on this basis.

7.3.1 Omstillingslova 2008

In 2008, a new legislation for restructuring was enacted in Norway. This
new act, Omstillingslova (Act on Notification of Closure of Business,
LOV 2008-06-06 nr 38), essentially sets out a notification requirement
for companies that intend to terminate their business, forcing them to
participate in discussions. This is done with the aim of finding alternatives
for closing down, thus stopping the process before it is carried through.
Earlier, the company was only obliged to notify employees of the termi-
nation of activity (which is in accordance with EU policy on the same
matter). The Act involves companies with 30 employees or more that are
in a situation where closing down or the dismissal of more than 90 % of
the workforce is considered. Closure due to bankruptcy is not subject
to the Act. The required notification should be public and delivered to
the regional authorities at least 30  days before the actual closedown of
operations, thereby supporting a process of restructuring and dialogue
between the company, regional and state authorities, employees and other
Omstillingslova may be comprehended as an advancement of the
long-term restructuring policy described above, basically strengthening
the possibilities for a continuous restructuring policy further. The main
objective of the Act is to force companies to assume responsibility for
the local community affected by its actions. A further aim of the Act is to
reduce negative consequences of closure, and if the appropriate business
requirements exist, the expectation is that the entire company, or part of
it, continues its activities. In addition to this, available labour and capital
should be invested in new and profitable businesses. Omstillingslova also

allows the possibility for employees to acquire the business. The labour
legislation in Norway obliges the company to inform employees about the
closure, but does not give employees the right to take over the business.
Now, however, the company is forced by the Act to discuss compensation
and restructuring possibilities for the employees, as well as possible busi-
ness policy measures by which the company can support the community.
In a recommendation to the parliament, the Business Committee pre-
sented a series of beneficial effects that the enactment of the legislative
bill would have on restructuring (see Næringskomiteen 2008). With the
notification requirement, the aim is to increase dialogue between the
company, regional authorities and other important actors. The dialogue
should make alternatives to the closure visible and the legislation should
ensure that dialogue starts as early as possible. According to the Business
Committee, the economic benefit for the community is tied to enhanced
transparency in the restructuring process, as stakeholders receive more
accurate information about restructuring requirements at an earlier stage.
A public notification can simplify the accessing of information for poten-
tial investors.
According to the Act for Restructuring (LOV 2008-06-06 nr 38) the
company must compose a notification containing

• the number of employees working at the company

• information about the activities of the company
• an assessment of the consequences for the employees and the local
community in the event of the closedown of the company
• background to the plans for closure
• information about what assessments the owner or others have made
about alternative activities
• an assessment of what is necessary for the activities to continue
• information about negotiations with the employees about the closure

The notification must be sent in to the county authorities at least 30 days

before the closure. In special cases, the county has the right to prolong
this period of time to up to another 30 days. After receiving the notifica-
tion, the county will gather together representatives from the company
directors, the employees, the municipality, the state regional development
agency (Innovasjon Norge), and the Labour and Welfare Agency, for a
discussion. The group then has to discuss possibilities for a continuation of
operations and evaluate alternatives to the closedown. Compensation and

restructuring possibilities for the employees and the community should

also be evaluated.


The case comparison to the Norwegian ideal consists of, first, a descrip-
tion of regional development and restructuring policy and legislation in
Finland, second, an in-depth study of the restructuring process in Kaskö
and the Southern Ostrobothnia region through strategy documents and
interviews with 13 key actors in the region.

7.4.1 Sudden and Long-Term Restructuring Policy in Finland

The regional policy of the EU is important for regional development in
the Finnish case since the Structural Funds and the funds for rural devel-
opment are vital sources for development funding. This, along with state
development funds, encourages long-term restructuring strategies some-
what similar to the Norwegian case. Of course, the Structural Funds also
support crisis-based efforts.
On a subregional level, Business Development Agencies have been
established to promote the development of each subregion. These agen-
cies manage the COCO mentioned previously, and write up a regional
strategy for the subregion in which the agency is operating. The strat-
egy is based on the Regional Development Programme, and during the
planning process, key actors, such as elected officials, business representa-
tives and NGOs, are gathered in the subregion. In Finland, these busi-
ness development agencies are recent constructions, as many of them were
founded during the last two decades. When COCO was terminated in
early 2012, the Business Development Agencies lost an important part
of their activity. Of course, peripheral areas have more difficulties main-
taining business development activities on their own. With regard to the
case presented here, the three small towns in the subregion of Southern
Ostrobothnia have been gathered around COCO for the development
of the region. The COCO programme has been handled by Dynamo,
the business development agency of Närpes, the largest town in Southern
Ostrobothnia. Southern Ostrobothnia has a history of cooperation diffi-
culties, which became evident when an attempt to found a business devel-
opment agency for the whole subregion failed in 2010 (see section on
Kaskö below).

A Finnish model for restructuring that responds to sudden and

substantial layoffs has been constructed on the basis of experiences from
the Voikkaa case in 2005 (see Ahlberg 2008 for a description of this case).
Following this model, the Ministry of Employment and the Economy
sets up a working group gathering central labour market organisations,
and decides whether the region should be classified as an area in need
of sudden restructuring funding. On a regional level, the regional state
organisation ELY gathers together a working group consisting of employ-
ment agencies, affected municipalities, business development agencies,
the employer in question and the employees. Re-education of employees
and support for new businesses are important components in the model.
Providing employees and firms in the area with information of new jobs,
new business solutions and education is essential in order to rapidly initiate
a development process in the region. In this process, the cooperativeness
of the company in question is decisive (Mäkitalo and Paasivirta 2011).
The above-mentioned model was also used as a guideline in the restruc-
turing process in Kaskö. Despite this, the course of events in the case of
Kaskö differs sharply from other cases in Finland. Mäkitalo and Paasivirta
(2011) point out the Kaskö case as the largest failure in the Finnish
restructuring model in recent years. Especially notable compared to other
similar cases in Finland is the lack of social responsibility on the part of
Metsä-Botnia, the company terminating operations in Kaskö. In Kajaani,
for instance, following the closedown of the paper mill in 2008 and the
termination of the contracts of 535 employees, the company UPM pro-
vided 16 million euros for the modification of the factory facilities and for
funding other restructuring measures. In early 2011, after declaring the
termination of the production of their mobile operating system Symbian,
Nokia announced their commitment to supporting the restructuring pro-
cess in affected areas financially, with technology, as well as with know-
how. In Jyväskylä in 2009, Metso and Nokia simultaneously terminated
the contracts of a substantial number of employees, though both compa-
nies participated actively in the restructuring processes, which produced
new education programmes and innovative environments (Mäkitalo and
Paasivirta 2011: 81–6). The description of events in the Kaskö case depicts
vast differences compared to the above-mentioned cases in the attitude
displayed by Metsä-Botnia. Social responsibility is generally a standard
element in restructuring cases in Finland, though such efforts are not
required by law. The case of Kaskö draws attention to the necessity of such
a legislation.

During recent years, the Finnish government has understood the

importance of getting ahead of large industry closedowns. In 2009, the
Ministry for Employment and the Economy in cooperation with the paper
company Stora Enso initiated the development of a model for proactive
restructuring. With this model, restructuring efforts are commenced prior
to the closedown, allowing new businesses to the factory area and mak-
ing use of facilities, infrastructure and equipment already in place. The
efforts are financed equally by the ministry and the company in question
(Mäkitalo and Paasivirta 2011: 80).This is a model that is more in line
with the Norwegian approach to restructuring, though it needs compa-
rable legislation to back it up.

7.4.2 Restructuring Legislation in Finland

Unlike the Norwegian case, Finland lacks a legislation specific for long-
term industrial restructuring. In cases of closures, Finland complies with
EU directives for informing and consulting employees (2002/14/EG),
and for collective redundancies (1998/59/EG). These legislations
declare that “information, consultation and participation for workers
must be developed” (2002/14/EG), and that “where an employer
is contemplating collective redundancies, he shall begin consultations
with the workers’ representatives in good time with a view of reaching
an agreement” (1998/59/EG). These directives are closely followed
in Finnish legislation in the Act on Cooperation within Undertakings
(334/2007). This Act states explicitly that a cooperative negotiation
in the case of a closedown is a matter between the employer and the
employee (§7, §46), and the law obliges no liability for the company
with regard to the community. However, the company, together with
the employment authorities, is obliged to investigate public employ-
ment services that promote job opportunities (§48).
Hence, the element obliging the company in question to take
responsibility for the community it operates in is lacking in the Finnish
case, which only requires the company to take care of the employees.
Additionally, the Finnish legislation also lacks the 30-day extension time
in the case of a closedown stipulated in the Norwegian Notification Act
of Closure.

7.4.3 The Town of Kaskö and the Subregion of Southern

The town of Kaskö is situated in the very south of the region of
Ostrobothnia in Finland. Kaskö is a peripheral town, situated in a rural
area 100 kilometres from the regional centre. Kaskö was founded in 1785,
and is consequently not a genuine one-generation town in the true sense
of the term. However, a change of government economic policy meant
that competition with other cities and harbours along the Finnish west
coast—Kristinestad, Björneborg, Vaasa and Gamlakarleby—from the very
beginning, gave little room for Kaskö to “take off” as a centre for foreign
trade or an industrial city (Åström 1985). When the Metsä-Botnia factory
was established in 1977, Kaskö was a diminishing town with around 1300
inhabitants. With the setting up of the factory, the population increased
with almost 600 inhabitants (Räsänen 1985). In this sense, Kaskö became
a typical one-company town for 35  years, completely dominated by its
largest employer, the pulp mill owned by Metsä-Botnia.
Finland is a bilingual country, with both Finnish and Swedish as offi-
cial languages. Swedish is spoken by a 5 % minority situated along the
coastline in the south and to the west. Kaskö changed from being a
predominantly Swedish-speaking town prior to the establishment of the
factory, to a 70/30 ratio in favour of the Finnish-speaking population.
These language differences, amongst other culturally tied factors, create
a peculiar situation for cooperation in the area. Kaskö is part of the sub-
region of Southern Ostrobothnia, which consists of Närpes, with a 90 %
Swedish-speaking population, and Kristinestad with a nearly 50/50
language ratio. In total, about 18,000 inhabitants live in the subre-
gion, of which about 5000 are Finnish speaking. Traditionally, coopera-
tion between the municipalities has been complicated and Kaskö acts
with caution at the prospect of falling under the administration of the
Swedish-speaking Närpes while at the same time maintaining close con-
nections with Teuva, the bordering municipality to the east. Teuva is
monolingually Finnish and administered by the neighbouring region
to the east and part of the Finnish-speaking subregion of Suupohja.
Many of the workers at the factory in Kaskö lived in or were originally
from Teuva. Consequently, and as one can expect, a part of the Finnish-
speaking population in Kaskö feel more closely connected to Teuva and
Karijoki than Närpes and Kristinestad.

The tradition of cooperation between municipalities in Southern

Ostrobothnia has historically been weak. Recent pressure from the
government to merge small municipalities has drawn attention to this fact,
but still there is no solution in sight. From the point of view of regional
politicians and stakeholders outside Kaskö, the presence of the Metsä-
Botnia pulp mill enhanced these difficulties. As a consequence of the
strong economic position the factory offered, these actors experienced
reluctance from Kaskö to cooperate, despite attempts being made. The
standpoint of Kaskö would have been that everyone must safeguard their
Another example of difficulties with regard to initiating closer coop-
eration is the failed plans to establish a common business development
agency for all the three municipalities in Southern Ostrobothnia. This
initiative tried to meet the demands that occurred when the factory was
shut down, but failed because Kristinestad had already started plan-
ning their own business development agency. Instead of establishing an
agency for the whole subregion, there is now one development agency
in Närpes, and one in Kristinestad, while Kaskö is lacking the services
of such an agency.

7.4.4 Policy Interventions: Main Actors, Coordination

and Process of Intervention
When asked about the possible closure of Metsä-Botnia’s pulp mill before
it actually closed down, both the town of Kaskö and the mill workers
stated that the mill was well maintained and would not be closed down
in the foreseeable future. Metsä-Botnia never communicated clearly that
a closure would occur, which somewhat prevented pre-emptive measures.
The manager of the ELY-centre in Ostrobothnia has stated that normally
the procedure for the restructuring process closely follows the standard
model of restructuring used in Finland in these kinds of cases, where first,
a working group is assembled, and then employment and enterprise mea-
sures are taken. However, the passivity from the part of Metsä-Botnia
stands out compared to similar cases.
When the final decision for the closedown of the mill had been
taken, a working group was appointed by ELY, including actors from
the Regional Council of Ostrobothnia, Regional Council of South
Ostrobothnia, the ELY-centre, the local Employment Office and the
town of Kaskö, as well as other affected municipalities. The working

group applied for the whole subregion of Southern Ostrobothnia to

receive status of an area for structural transformation, which is the
standard procedure when a factory closedown occurs. The application
was still not successful, and instead, the Ministry of Employment and
the Economy decided that only the town of Kaskö should be classi-
fied as an area for structural transformation, because the neighbouring
municipalities Kristinestad and Närpes had such a low unemployment
rate (just above 2  % at the time). As a consequence, Kaskö does not
qualify as an area in need for special development support and can-
not i.e. receive support for building facilities for companies interested
in establishing themselves in the town. This has been an obstacle for
Kaskö when seeking new investors. State funding is, however, offered
directly as investment subsidies to new businesses. Support percentages
have been 20 % for small companies and 10 % for larger ones; 2.1 mil-
lion euro has been assigned to Kaskö for this purpose.
However, the town of Kaskö did receive the status of an area for struc-
tural transformation, allowing it to apply for ERDF funding. Two con-
secutive Nova Business Botnica projects have thus been funded by ERDF
(Nova Business Botnica presented below). The Employment Offices have
also been active, especially through the Botnia Progress-project. The proj-
ect reduced the effects of the closedown by retraining a number of redun-
dant workers and creating new entrepreneurship, through which also a
small number of one-man firms were established.

7.4.5 Nova Business Botnica

The main restructuring effort in the case of Kaskö thus came to consist of
the two consecutive ERDF-funded restructuring projects Nova Business
Botnica one and two. Deployed short after the closedown, these projects
may in every regard be perceived as crisis-based interventions. The total
budget of the two projects reached just above half a million euros, to
which the company Metsä-Botnia contributed with their statutory part,
in this case 80,000 euros. The restructuring effort was initiated by a small
working group gathering representatives of the Regional Council, ELY
and the municipalities in the area, and this group in turn appointed the
business development agency in the town of Närpes to write the action
plan of the first Nova Business Botnica project. The main aim, to attract
new investors to the town of Kaskö, 10 new companies and 100 new job
opportunities, was to be achieved through three main measures:

– New business ideas among the laid-off Metsä-Botnia employees

are searched for, and assistance for realising them is provided
by directing employees to available business advice and support
– New investments and businesses are searched for. The opportuni-
ties on the factory premise are presented to 1300 companies via
“bulk mailing”.
– A “Business Park” vision is developed, on the basis of the available
factory facilities, offices, infrastructure and the harbour.
The project did not meet any of its aims. The manager of the project
saw two main reasons for this: (1) the project was launched simulta-
neously as the global economic recession hit Finland. Very few of the
contacted companies were in a position to carry out new investments
at the time. (2) Despite initial promises from Metsä-Botnia, the com-
pany consistently refused new companies access to the factory premise.
Eight companies were seriously interested, but Metsä-Botnia refused,
referring to possible disturbances to the production of M-Realm, a
smaller cardboard factory partly owned by Metsä-Botnia and still oper-
ating in the industrial area. The manager concluded that the Business
park vision in practice became unrealistic due to the reluctant attitude
of Metsä-Botnia.
As a consequence, the second Nova Business Botnica project omitted
the business park vision as an objective, but otherwise, the rationale was
similar to the first stage. In the second project, as many as 6500 compa-
nies were mailed concerning the business opportunities in Kaskö, but with
very slim results. The manager of the second project concluded that the
peripheral location of the town is difficult to overcome when advertising
the area to investors.


Transferring restructuring practices from Norway to Finland has been
attempted in the context of the transnational research project “Learning
about development in Botnia Atlantica” (LUBAT). The project has
arranged two learning seminars gathering local and regional actors in
Ostrobothnia. At these meetings, researchers of the LUBAT project
have presented the Norwegian model as described above, while the
possibilities for introducing aspects of the model in the Finnish system

1. 2. 4. 5.
3. Externalisation:
Socialisation: Externalisation: Combination: Internalisation:
assessing the
Sharing of tacit create common create an crossleveling,
knowledge concepts archetype explicit
Which concepts knowledge
Method of Similarities and In what way
are beneficial in
restructuring in differences can beneficial New concepts
the context of the
Kaskö and between the concepts be are tested in
other country?
Norway two methods implemented? reality.

Fig. 7.1 Stages in transnational learning. Interpretation of the SECI model

(Nonaka and Takeuchi 1995)

have been discussed. In the following, a summary of these seminars

will be presented through an interpretation of Nonaka and Takeuchi’s
SECI model (1995), which may be comprehended as a comparison
between the ideal model and the case study. Three main issues were
especially observed in the seminar discussion: (1) the long-term stance
to restructuring, (2) the regional approach to restructuring and (3) the
legislative obligations for the company. These three issues are regarded
as the most significant differences concerning the restructuring poli-
cies in Finland and Norway and as the most potent for possibilities of
transnational learning.
In accordance with the SECI model, the seminars are analysed by using
five stages (see Fig. 7.1). The first seminar reached the third stage, while
the second seminar extended to the fourth stage. The fifth stage, the test-
ing of the new concepts in reality, was not achieved during the time frame
of the LUBAT project.

7.5.1 The Learning Seminars

The first seminar was arranged in the town of Kaskö on the 5th of October
2011, and gathered key actors in the Southern Ostrobothnia region.
Here, previous employees of the factory participated, as well as local
Table 7.1 Transnational learning seminar in Kaskö

1. Sharing of tacit knowledge 2. Creating common concepts 3. Assessing the concepts

1. Long-term Norway: Long-term continuous A long-term “Business Park Vision” was The most important difference
restructuring restructuring by a common regional hindered by the reluctance of the between Norwegian cases and
restructuring organisation. company. The legislation for Kaskö is the reluctance of the
Kaskö: Short-term development restructuring did not offer the town of company to cooperate.

projects to attract new business, and Kaskö support for purchasing facilities. Cooperation between the
development of existing companies. municipalities in Southern
Efforts to establish a long-term business Ostrobothnia has traditionally
park. been difficult. This has obstructed
the formation of a permanent
business development
organisation for the whole region.
2. Regional Norway: The responsibility for Allocation of restructuring resources is The regional component was not
approach to restructuring is based on the regional level. not based on the regional level in further assessed in the seminar in
restructuring Kaskö: Restructuring is conducted through Finland. This aggravates the cooperation Kaskö.
a collaboration with regional authorities problems in Southern Ostrobothnia.
and the municipalities in the region.
3. National-level Norway: the Norwegian legislation Finnish legislation for employee The legislation for restructuring in
legislation commits companies to assuming protection lacks a component for Finland is lagging behind in
responsibility over the local community. supporting future entrepreneurship. comparison to Norwegian
The legislation does not only give the The legislation puts no obligation on legislation.
employees protection, but also obliges the company to facilitate
companies to offer their facilities for entrepreneurship in the local
sale, among other things. The community. The Finnish legislation does
legislation demands a notification not demand early notification about a
30 days in advance before closedown of closedown and the closedown in the
an operation. town of Kaskö, for example, came as a
Kaskö: The legislation is concerned with surprise.
employees’ conditions.

politicians and officials, representatives of the business development

agency in Närpes and the local employment office. The seminar reached
the third point on the SECI model, as summarised in Table 7.1.
The second seminar took place in Vaasa on 16th of March 2012. This
seminar complemented the first in the sense that representatives of the
Regional Council of Ostrobothnia as well as the state regional agency
ELY also participated, along with actors from the Southern Ostrobothnia
region. The aim was to achieve the fourth stage in the SECI model. The
two first steps are similar to the seminar in Kaskö, and are consequently
left out of the compilation in Table 7.2.

The general rationale in the Norwegian restructuring policy is that the
threat to the whole community a potential closedown represents in a
one-company town should in itself be enough for encouraging efforts to
diversify the economic life of the town. In comparison, all efforts in the
Kaskö case were crisis-based and short term. The setup in the Kaskö case is
consequently similar to the market-based measures made in Great Britain
in the 1980s and in Finland in the 1990s. Some entrepreneurs were sup-
ported in Kaskö, but there were no successful efforts to bring about a
permanent support organisation for the development of business life in
the whole Southern Ostrobothnia region. The stakeholders interviewed
in the region clearly expressed that on the global market the attractive-
ness for exogenous investment is limited for a small peripheral town. The
difference in legislation between the countries becomes evident when the
behaviour of the company, in this case Metsä-Botnia, is analysed. With
the Norwegian Omstillingslova, Kaskö would eventually have had a better
chance of coordinating the allocated resources.
Development planning does to an extent exist in Finland, carried out
through the Regional Programme of the Regional Council and develop-
ment programmes of the subregions. However, a comparison with the
Norwegian tradition of restructuring draws attention to the fact that the
regional planning process there is insufficiently linked to a continuous
reinforcement of regional economic development. For instance, com-
plaints were made about the regional strategy for Southern Ostrobothnia
(written within the framework for the COCO programme) by regional
actors, who pointed out that no one wanted to take responsibility for the
programme. Feedback must be given continuously and regional actors
Table 7.2 Transnational learning seminar in Vasa

3. Assessing the concepts 4. Creating an archetype

1. Long-term A long-term strategy for restructuring would have been natural Long-term restructuring is preferred in the Finnish
restructuring for a one-sided industrial town like Kaskö. The cooperation context. Cooperation difficulties have obstructed such
difficulties between the municipalities in Southern Ostrobothnia activity in the studied area. Cooperation difficulties
obstructed such efforts. The cultural differences between the could be solved through merging the municipalities.

municipalities are substantial and cooperation is difficult to

achieve. The municipalities in Southern Ostrobothnia are too
small for maintaining a restructuring organisation on their own.
2. Regional The aim of the municipalities in Southern Ostrobothnia is not to The power of the regional governing bodies should
approach to create new employment opportunities within the region, but rather not be strengthened in Finland. Instead, the
restructuring within each municipality. They compete for tax revenue when municipalities should be enlarged and strengthened,
restructuring efforts are discussed. However, elevating the and this would give better prerequisites to manage
coordination of restructuring to a regional level, as in the Norwegian restructuring challenges and also make the
model, is not the answer to cooperation difficulties. Rather, the competition for tax revenue irrelevant.
problem lies in the nature of the relationship between the
municipalities in Southern Ostrobothnia. The approach to regional
administration in Finland is based on municipal governance. A
municipal reformation imposed by the government has proposed a
merging of the three municipalities in the region. This would make
the competition for tax revenue insignificant.
3. National- The restructuring legislation in Finland is lagging behind in Legislation for restructuring should take into account
level legislation comparison to the Norwegian one. Commonly, a subregion both employee safety and incentives for future
receives restructuring area status. The case of Kaskö is an entrepreneurship as well as the survival of the community.
exception, since only the town of Kaskö received the status in Further, it should oblige the company to offer the
question. This complicated the cooperation difficulties in the industry estate for the use of the municipality. Also, the
area. If legislation in Finland would have automatically raised the company should notify plans regarding closing in advance.
level of support to the region, Kaskö would have received The legislation for an area in need of structural
funding for purchasing facilities for future business transformation should be modified so that a subregion
establishments. would automatically receive restructuring area status, not
as in the case of Kaskö, where only the town of Kaskö
received this status.

must be allowed to join the process. Further, this task can only be carried
out by a regional business development agency. At the time of closure,
there was no joint development organisation in Southern Ostrobothnia,
and the consequence of this was that a wide range of stakeholders had to
reach an agreement with regard to the measures that were to be taken.
Stakeholders in the region had no common strategy, which was largely due
to the existing administrative structures. By contrast, in the Norwegian
model a long-term strategy is planned so that the resources made available
can be concentrated in order to strengthen the economic development of
the region. All responses were late in the case of Kaskö, and the lack of a
Finnish Omstillingslova further increased the lateness of the efforts.
The scope for regional initiatives for the development of an area has
traditionally been limited in Finland, as regional development institutions
have largely consisted of state-controlled structures. Despite the significant
developments at a regional level during the last two decades, the position of
Regional Councils is still weaker than that of counties in Norway. The dif-
ference is partly due to the fact that Regional Councils do not own taxation
rights, and partly because the regional administrative structures in Finland
are a recent development, and in which the division of remits is not as clear
as in Norway. The path dependency of the structure described by Jessop’s
SRA theory is thus visible in the Kaskö case. However, regional develop-
ment of Finland consists of programme writing, in which all sectors of soci-
ety are invited and thus there can be room for engagement on a local level.
Analysing structural differences further, it becomes clear that the
regional administrative structures are somewhat different in the two coun-
tries. In Norway, the initiative for restructuring and funding originates
from the county. A similar structure in Finland would have prevented the
problems of funding only being directed at the town of Kaskö and not
the surrounding region. This increased competition for tax payers, being
already a problem in the region. The path dependency of the administrative
structure becomes evident as the Finnish system so strongly emphasises
the role of the municipalities at the expense of regional structures.
The learning seminars point out especially three issues that are valuable
when considering new practices for restructuring in the Finnish context.
First, that cooperation difficulties and competition for taxation incomes are
possible in a geopolitical structure that consists of many small municipali-
ties. In the Finnish context these are rare, but in the case of Kaskö seemingly
unavoidable, obstructing long-term restructuring in the region of Southern
Ostrobothnia. Arranging funding and restructuring efforts at a regional

level has been the Norwegian answer to these difficulties. The Finnish
administrative structure strongly emphasises municipal governance, and as
a consequence, municipal merging has become a more natural solution.
Second, legislation regarding restructuring is lagging behind in Finland,
as it largely neglects the company’s social responsibility. Third, the case of
Kaskö draws attention to the inflexibility of the legislation that regulates the
level of support for the restructuring of areas. The legislation hindered the
town of Kaskö with regard to engaging with constructive actions to meet
the challenges of the closedown of the factory. With these elements cor-
rected, restructuring in Kaskö would have been more successful.
The closure of the mill in 2010 came as a surprise, without advance
warning to the employees or the municipality. The first actions that
were taken were somewhat misdirected, and the attitude of the com-
pany hindered effective action. In comparison with the Norwegian ideal,
the region of Kaskö lacked the readiness displayed by a structure that is
geared towards long-term restructuring. Therefore Kaskö provides a case
example of a situation where there is a lack of mutual understanding and
cooperation, and the case analysis demonstrates what the consequences
of these disadvantages are. The history of cooperation problems in the
region, the relatively weak position of the regional government and the
lack of a business development agency, intensified the difficulties when
restructuring efforts were needed, which in turn, led to misdirected and
late responses. In addition, there was no possibility to set up obligations
for the company to offer their facilities for future operations. Because of
these circumstances, all efforts were late and short term.

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Enabling Regional Growth in Peripheral

Non-university Regions: The Impact
of a Quadruple Helix Intermediate


There has been a prevailing belief in economic sciences that regionally
based growth needs large regions, and this supposition has been based on
a seeming correlation between growth and the ability to produce innova-
tions. However, the Smart Specialisation Strategy (S3) of the EU seems
to present an option also for peripheral regions in this regard. Rather than
leaving innovation to R&D-intensive industries, the S3 views the het-
erogeneity of the regions as the basis of innovation (Smart Specialisation
Platform 2012, see also Asheim et al. 2011b: 1134). Concisely put, the
rationale of the S3 is that by connecting regional innovation systems to
national or global knowledge networks and thereby accessing enabling
technologies, every region may enhance the performance of its innova-
tion system and consequently achieve growth. Regional competitiveness
should accordingly originate from the uniqueness of regional businesses
through interactive innovation, in other words by combining science and
technology and workplace experience. The suggestion put forward in this
study is that the act of linking regional knowledge networks to global

Originally published in Journal of Knowledge Economy (2015) 6: 334–356.

© The Author(s) 2017 185

K. Nordberg, Revolutionizing Economic and Democratic Systems,
Palgrave Studies in Democracy, Innovation, and Entrepreneurship
for Growth, DOI 10.1007/978-3-319-40633-6_8

excellence may compensate for the shortcomings of size and consequently

enable peripheral regions to survive global competition. Specifically, the
study focuses on the Kokkola-Jakobstad region, a small and peripheral
region lacking a regional university, and thereby depending on the ability
of existing research institutions to connect the region to outside knowl-
edge networks. For the purpose of depicting the regional innovation sys-
tem, a case study of the evolution of the technology centre KETEK will
be carried out.
When adopting S3, the region should produce a regional vision based
on the specific regional context, by selecting priorities on the basis of
regional strengths, features and resources, and the potential these hold for
innovation. S3 adopts scientific concepts such as the Mode 3 Knowledge
Production System, the Quadruple Helix Innovation System and the
related variety concept, and the regional vision should in accordance
with these concepts aim at developing arenas for related variety and both
internal and external links, as well as present the innovation system as
a collective endeavour. Following the rationale of the S3, a theoretical
framework will be constructed in this study, using the concepts Mode
3, the Quadruple Helix and related variety. The framework will be used
for the purpose of examining the co-evolution of the knowledge and the
innovation systems, as well as of the economic and the political systems
in the region of Kokkola-Jakobstad over two decades. During this time
period, KETEK evolved to become the centre of the innovation system
in the region. The main focus of this study is to examine the impact of
an intermediate organisation on the development of the business system
in a non-university region. A secondary aim of the study is to further the
understanding of the Quadruple Helix concept by examining the effect
adjustments of the fourth helix may have on the performance of the Triple
Helix. The underlying assumption here is that certain characteristics of
the fourth helix may bring the Triple Helix actors closer to each other and
thereby attune a region to creativity and innovation.
Choosing a technology centre and a region located in a Nordic country
as a case study may have its special benefits. According to Goddard et al.
(2012: 613–614), the possibility of initiating bottom-up innovation pro-
cesses in underdeveloped innovation systems is far larger for technology
centres than universities since technology centres are “capable of identify-
ing and ‘federating’ local business demand for innovation … and chan-
nelling it towards regional/national/ international sources of innovation
… which may give response to these demands” (Landabaso 1997: 11).

A Nordic case may also raise the probability of identifying the impact of a
fourth helix, since the “Nordic welfare model” allows “experimentalism”
and “bottom-up renewal processes”, as described by Kristensen and Lilja
(2009: 2). Additionally, it seems probable that the impact of the fourth
helix, as well as of an intermediate organisation, may be far greater in a
small and peripheral region lacking large universities and companies able
to set the agenda of development disregarding regional circumstances.
The outline of the study is as follows. The next section briefly explains
systems theory in order to define the key position an innovation system
possesses in a post-Fordist society. This is later used to explain the poten-
tially central position technology development organisations may have
for general regional development. The third section sets up the theo-
retical framework of the study by discussing the concepts of diversified
knowledge bases, innovation modes, related variety as well as Mode 3
and the Quadruple Helix. Here, it is concluded that the Quadruple Helix
concept has been somewhat confused in scientific literature and a sug-
gestion for a more specific definition is put forward. The fourth section
presents the case-study region and the evolution of the technology centre
KETEK. Then, in the fifth section, the case study is evaluated against the
theoretical assumptions, while the last section concludes the study.


The theoretical discussion in this study departs from the understanding
that there is a tight connection between different society systems, and
that the characteristics of the post-Fordist knowledge economy position
the innovation system in the centre of general regional development. In
this manner, there is a co-evolution happening of all society systems, and
in order to be able to understand the mechanisms of this, we will start by
discussing Systems theory.
There are two general strands of Systems theory: General Systems
Theory (GST) and Sociological Systems Theory (SST) (Esmark 2011:
91). GST is the stricter one of the two, insisting the existence of auto-
poiesis. In short, autopoiesis suggests that if an actor outside of the sys-
tem attempts to influence it, it immediately ceases to exist. Although GST
allows an opening for inducing change through the ability of “governance
of self-governance” (Esmark 2011: 94), there is an obvious incongruity

of this understanding and the understanding of the way the networked

society is functioning. Instead, SST seems more appropriate for the con-
text of this study.
In SST, modern society is understood as “not simply divided into state,
market and civil society, but is subject to a much more pervasive functional
differentiation between function systems such as the political system, law,
economy, science, family, religion health, mass media, education, art etc”.
(Esmark 2011: 96). Luhmann (1997) relates to Parsons’s (1951) theory
of “interaction mediums” when he suggests that every one of these soci-
ety systems houses its own specific culture and communicative rationality.
However, SST does not, similar to GST, see a conflict between the net-
worked society and self-governing systems. In SST, networks are equated
to interaction systems, which are interpreted as the “actual presence of
actors in the same physical location or contact mediated by communica-
tion technology”, while organisations are defined as “systems facilitating
the communication of decisions, and in particular collective decisions”
(Esmark 2011: 99). SST strongly emphasises that organisations, such as
the government in their utilisation of networks, influence only the inter-
action system, not the traditions of function systems. Furthermore, SST
implies that every organisation utilises the traditions of a number of func-
tion systems in their pursuit of improving their operations, and in this
manner, we see a co-evolution of the society systems.
When specifically studying the innovation system, the political, knowl-
edge and economic systems are of relevance. Carayannis and Campbell
(2006: 11) assess that both the political and the knowledge systems are
similar in the manner that they aim at improving the performance of soci-
ety. The political system does this through the governance of society, while
the knowledge system realises it by producing knowledge. The innovation
system can be considered as a “subsystem of the aggregated knowledge
system” (Carayannis and Campbell 2006: 12). Although the political sys-
tem is able to influence the economic system directly through economic
policy, in many cases, the political system can do this even more efficiently
through innovation policy (Carayannis and Campbell 2006: 12–13).
Thus, the innovation system constitutes an important interface where the
political, economic and knowledge systems meet and interact.
The reasoning of the two main concepts (Mode 3 and Quadruple
Helix) of the theoretical framework in this study is that an improved par-
ticipation of actors—the creators, users and appliers of knowledge and
technology—is beneficial for knowledge production and innovations.

Economic system

Innovation system

Political system Knowledge system

Civil society, culture, media, NGOs etc.

Fig. 8.1 Societal systems interact through the innovation system for regional

Instead of knowledge proliferating in a top-down fashion, every location

has the potential of contributing to regional, national and global networks
of knowledge and innovation. Looking at academic literature in connec-
tion to the political system we see a parallel development. Here, there is
a growing strand of research emphasising the importance of bottom-up
functioning policy networks, often labelled governance networks (see e.g.
Sørensen and Torfing 2007). The use of citizen juries has proliferated
in public management with the aim of achieving better informed deci-
sions. Carayannis and Campbell refer to this parallel development as the
“co-evolution of advancing democracy and of advancing innovation and
knowledge” (2012: 19). Consequently, both the political and the knowl-
edge systems increasingly operate in an inclusive fashion, and in that man-
ner provide two separate flows of knowledge of the regional context. In a
system based on the Triple Helix actors, the innovation system becomes
the meeting place for these two types of knowledge, and consequently,

the innovation system receives a central position in regional development

(see Fig. 8.1).
Accordingly, the suggestion put forward here is that strategies for
developing the innovation system is not only of significance for the perfor-
mance of the regional economic system, but determines to a large extent
the direction of general regional development. In the case studied here,
the technology centre KETEK is a central player in the regional innova-
tion system and is in accordance with the above reasoning, a key actor also
in regional development.


For the purpose of examining the co-evolution of the regional systems
in the case study, I will construct a theoretical framework by discussing
central concepts of the S3 strategy: innovation modes, diversified knowl-
edge bases, related variety, Mode 3 Knowledge Production System and
Quadruple Helix Innovation System.

8.3.1 Diversified Knowledge Bases and Innovation Modes

Following the paradigmatic shift from Fordism and the industrial econ-
omy to post-Fordism and the knowledge economy, the perception of
knowledge and how it may be used has altered drastically. There is an
increasing awareness visible of the innovative power inherent in diversified
knowledge bases, in other words, the combination of different kinds of
knowledge rather than the strict separation that was dominant under
Fordism. Evidence has been put forward of the manner in which many
companies make use of knowledge bases originating from a whole range
of industry branches and technologies, not only constricting themselves to
the industry sector the company is operating within (Asheim et al.2011a:
14). Knowledge flows are taking place not only between different types of
knowledge bases but also between different levels of R&D intensity, and to
instantiate this, Asheim et al. (2011a: 15) present the example of the col-
laboration of biotech firms and the functional food producers, which the
authors believe depict how “the distributed knowledge networks transcend
industries, sectors and common taxonomies of high tech or low tech”.
The increasing need of different types of knowledge puts high demands
on regional knowledge bases. Naturally, this occurrence has manifested
itself in a need to connect to external innovation and knowledge networks,

and while even metropolitan regions have difficulties of housing the broad
range of knowledge bases demanded, this need is of course even more
striking in peripheral and small regions. Of course, vicinity is still a factor,
and accordingly, there is simultaneously a need for intensifying internal
regional networking as well, as is visible in for instance cluster literature.
Asheim et al. even suggest that the high-tech/low-tech dichotomy is
counterproductive and that it obstructs the potentially productive combi-
nations of diverse types of knowledge. In a similar manner, Asheim et al.
also view the interpretation of knowledge as codified or tacit as too narrow,
since these two types always co-exist, and that this separation may hinder
potential innovation (Asheim et al. 2011b: 11135; Asheim et al. 2011a:
13; Johnson et al. 2002). The high-tech/codified versus low-tech/tacit
contradiction is also addressed by concept of innovation modes (Jensen
et al. 2007), which identify two types of innovation modes:

1. STI: Science-Technology-Innovation mode is characterised by a

science-approach to innovation. Innovations are based on the produc-
tion and use of formalised and codified knowledge.
2. DUI: Doing, Using and Interacting mode refers to experience-based
know-how, a user or market-driven model based on competence build-
ing. Knowledge production is often tacit and incremental.

Traditionally, under Fordism, the STI mode has been dominant, and
public policy still easily ends up in STI types of investment strategies. In
this context, the innovation modes concept wants to highlight the limits
the negligence of experience-based learning entails. One possible conclu-
sion of this reasoning is that the ignorance of DUI may allow for sys-
tems with a lot of science but less innovation and adaptation to actual
products (Virkkala 2013: 264). The innovation modes concept builds on
the notion that the companies with the strongest innovative performance
are the ones succeeding in mixing the STI and DUI modes of innova-
tion (Jensen et al. 2007: 690). These companies are able to connect their
innovation process to codified global knowledge networks and simultane-
ously succeed in applying the acquired knowledge to the manufacturing
process. While STI has a top-down operating character to it, DUI is able
to function in a bottom-up fashion, obtaining, refining and making use of
region-specific specialisations and orientations. The real advantage of suc-
ceeding in combining STI and DUI is in this manner the ability to create
new market niches visible out of the local perspective but invisible for the

STI mode of innovation. The combination of the two modes entails an

increased networking by establishing feedback loops from the workshop
to R&D organisation, and ideally offering adjustment suggestions to ana-
lytical types of knowledge.
Still, the inherently different innovation cultures STI and DUI repre-
sent naturally presents difficulties for the combination of the two. The
codified, scientific STI, belonging to academic circumstances, uses a com-
pletely different language than the one present in manufacturing, where
implicit and local codes are used. Jensen et al. suggest that this issue needs
to be addressed already in training. By introducing students to global and
local codes and training them in the skill of combining STI and DUI
through problem-based learning, they may be prepared for the language
differences (Jensen et al. 2007: 690).
This reasoning represents a significant incentive for developing region-
ally based innovation platforms, where the necessary interplay between
workplace experience and codified knowledge may be enabled. Virkkala
(2013: 265) interprets this as regional development with an exogenous
source, rather than endogenous, where higher education institutes (HEI)
act as translators and adaptors of global codified knowledge to regional
and local needs.

8.3.2 Related Variety

Related variety rejects the high-tech/low-tech dichotomy and favours the
combination of knowledge types and industrial sectors in a similar manner
as the concept of innovation modes described above. This development
is contradictory to the logic of the MAR externalities (from Marshall’s
(1920) notions on industrial districts), which basically implies focusing on
“key sectors” and duplicating best practices. Here, we see an argumenta-
tion over whether regional specialisation (MAR externalities) or regional
diversification (Jacobs’s externalities) is more favourable to innovation.
Jacobs’s externalities are derived from Jane Jacobs’s (Jacobs 1969) study
of the shipbuilding industry in Detroit in the 1830s. Jacobs illustrated
how this industry was developed as a consequence of a need to transport
flour along the river, and later, the knowledge of gasoline engines could
be transferred to the developing auto industry in the 1890s. Moreover,
the auto industry benefitted from the presence of machine and steel indus-
tries in the area. This case illustrated how the diversity of the local indus-
try stimulated further innovation, but for many decades, the necessary

relatedness of these industries was not understood. In 2007, Frenken and

Verburg (2007) suggested a differentiation of variety into related and
unrelated variety, where the first implies that variety needs to be somewhat
related in order to spill over to other sectors (Boschma and Iammarino
2009). As long as there is no relation needed, any type of variety may
be comprehended as beneficial, and this to a large extent disabled the
variety concept for a long time (what may, for instance, a farmer learn
of a smartphone manufacturer?). Related variety consequently demands a
variety based on cognitive closeness, which implies that the region possesses
complementary competences and knowledge bases. Advocates of related
variety see a risk of “cognitive lock-in” when focusing on regional spe-
cialisation (Asheim et al. 2011a: 2–4), while related variety implies finding
new concepts through the combination of different kinds of knowledge,
also by including related knowledge received through interregional con-
nections (Asheim et al. 2011a: 7).
The virtue of related knowledge has been somewhat established also in
empirical studies. Boschma and Iammarino (2009) found a strong correla-
tion of growth and related variety by studying import and export numbers
in Italian regions. Frenken and Verburg (2007) demonstrated how Dutch
regions displaying the highest degree of related variety also had the fastest
employment growth during the studied time period 1996–2002. In con-
clusion, related variety emphasises the benefit of diversifying the regional
economy in order to avoid a cognitive lock-in due to regional specialisa-
tion. At the same time, the concept highlights the necessity of some kind
of relatedness between the sectors. When an appropriate level of related-
ness is reached, related variety is suggested to provide knowledge transfers
in regional systems, as well as transferability of labour and favourable con-
ditions for the occurrence of spin-off firms (Asheim et al. 2011b: 1136).
Considering general regional development, and referring back to the
study of industrial restructuring of one-company towns, unrelated variety
may to some extent also be a preferred strategy, since the decline of one
sector does often not imply the simultaneous decline of unrelated sectors.
For this study, however, related variety is in focus.

8.3.3 Mode 3 Knowledge Production System

The Mode 3 Knowledge Production System may be regarded as a develop-
ment of the Mode 2 concept introduced by Gibbons et al. (1994). Mode
2 in turn reacted to the traditional model of knowledge production, Mode

1, which basically saw knowledge production as a linear process, mainly

conducted in academic environments and implying investigator-initiated
and discipline-based knowledge production. Here, knowledge is linearly
transferred from basic research via applied research to experimental devel-
opment at the firm level, with few possibilities for feedback (Arnkil et al.
(2010: 7), see Fig. 8.2). Kline and Rosenberg (1986) concluded in their
study of the linear model that it displayed substantial deficiencies, since the
lack of feedback possibilities hinders developments based on experiences
from the stages of designing and testing actual products. The authors
point out that knowledge gaps may reveal themselves only at these stages,
even providing opportunities for new fields of research.
Gibbons et al. (1994) instead witnessed a new type of knowledge pro-
duction emerging since the mid-twentieth century, naming it Mode 2.
This type of scientific knowledge production displayed more feedback
loops and non-linearity and allowed for “transdisciplinarity”, “knowledge
produced in the context of application” and “heterogeneity and organisa-
tional diversity” (Gibbons et al. 1994: 3–8; 167). The rationale of Mode 2
consequently advocates a tight connection between users and producers of
knowledge, in other words, a high level of interaction between science and
technology, as well as between companies and HEI. In contrast to Mode
1, innovations may in the Mode 2 system just as likely be products of
incremental technology development as of radical scientific breakthroughs
(Campbell and Güttel 2005: 152).
While these characteristics provide similar arguments as the virtues of
related variety and diversified knowledge bases presented above, Gibbons
et al. (1994) also introduce the importance of “social accountability and
reflexivity” for knowledge production, as also described by (Schienstock
and Hämäläinen 2001: 51):

Knowledge creation is intertwined and co-evolves with practical activities …

There is now widespread agreement that the process of knowledge creation

Higher Education HEI-related Firms

Institutions (HEI) institutions
Basic research Applied research development

Fig. 8.2 Mode 1 linear innovation modes (Carayannis and Campbell 2012: 25)

cannot be separated from other human activities. We can characterise inno-

vation as being embedded in social activities. (Schienstock and Hämäläinen
2001: 51)

Mode 3 Knowledge Production System is on the other hand described

as operating in accordance with both Mode 1 and Mode 2 simultaneously.
Carayannis and Campbell (2006, 2009, 2012) envision Mode 3 as a glo-
cal knowledge production system, implying both extensive connections
to global knowledge networks (similar to Mode 1) and a high level of
regional connectivity (similar to Mode 2). Mode 3 emphasises the impor-
tance of connecting different types of knowledge, and of basic, applied
and experimental research working as parallel and interconnecting pro-
cesses, offering direct knowledge flows between basic research and market
application (see Fig. 8.3). In this way, it is suggested that the time frame of
the whole R&D cycle may be shortened, providing regional competitive
advantage (Campbell and Güttel 2005: 167). Carayannis and Campbell
(2012: 40) see a specific advantage in a setup allowing for the coexistence
and co-evolution of knowledge paradigms, since these may interact and
learn from each other, and this is also in accordance with Kuhn (1962),
who suggests that the capability of a single paradigm to explain a phenom-
enon is narrow in comparison. Mode 3 allows for “top-down government,
university and industry policies and bottom-up civil society and grass roots
initiatives”, which provide for a “tighter and more robust coupling of
vision with reality” (Carayannis and Campbell 2012: 3).
Thus, Mode 3 neatly brings the concepts of related variety, diversified
knowledge bases and Mode 2 together. Nevertheless, Mode 3 also devel-
ops the social aspect of Mode 2 even further. With Mode 3, Carayannis
and Campbell (2012: 2) aim at “a sustainable development perspective
that brings together innovation, entrepreneurship and democracy”. The
community is brought forward as a decisive factor for innovation, since
“people, culture and technology meet and interact to catalyse creativity,
trigger invention, and accelerate innovation across scientific and techno-
logical disciplines” (Carayannis and Campbell 2012: 4), which implies that
“Mode 3 captures the notion of an innovative community” (Schoonmaker
and Carayannis 2012: 558).
Mode 3 also highlights the cultural differences of different types of
knowledge, as described in the previous sections. “Academic firm” and
“entrepreneurial university” are in this context used for describing the
manner in which firms and universities adopt characteristics of each other


Regional innovation
- Basic research
- Applied research
- Experimental
- Knowledge production
and use University-
Universities related

Fig. 8.3 Mode 3 non-linear innovation mode linking together universities and
firms, while connecting to global innovation networks (Carayannis and Campbell
2012: 24–25)

and thereby close the cultural and behavioural divide between them. This
also signifies an attempt to reach a higher degree of trust, which is certainly
necessary for accomplishing higher levels of collaboration (Campbell and
Güttel 2005: 167). For instance, a firm may in line with this reasoning be
able to learn to recognise and exploit scientific knowledge by adopting
certain specifics of HEIs. Concrete measure of achieving this is to recruit
academic personnel or encourage mobility of employees (Campbell and
Güttel 2005: 167–168).
To summarise, Mode 3 is working on all levels from the local to the
global, it combines different knowledge and political modes, it involves
several types of actors and it builds on the capability of all nodes in a sys-
tem to link to other networks.

8.3.4 The Quadruple Helix Innovation System and the Role

of Intermediate Organisations
As Carayannis and Campbell advocate a “Democracy of knowledge”, which
implies a diversification of actors and organisations involved in innovation
and knowledge production, the Triple Helix, as it stands, becomes inad-
equate in terms of explaining innovation systems. Admittedly, the evolu-
tion of the knowledge production concepts from Mode 1 to Mode 2 is of
course closely connected to the formation of the Triple Helix, since this
similarly turned against the linear model of knowledge creation. However,
at the same time, the Triple Helix may be considered as a decentralisation
of innovative development, where the industry and academia were first
separated from the direct influence of the state government, and then
reformed within an innovation model where the three actors partly over-
lap and form “trilateral networks and hybrid organizations” (Etzkowitz
and Leyesdorff 2000: 111–112). However, the overlapping of the three
helices has been suggested to not be sufficient for long-term innovative
growth, since innovations are increasingly produced in trans-disciplinary
and economic as well as social contexts, which implies the necessity for
including society in a Quadruple rather than a Triple Helix innovation
system (Arnkil et al. 2010: 14, Afonso et al. 2010: 2, Liljemark 2004: 50).
Since Quadruple Helix adds the social element to the Triple Helix, the
concept displays an obvious coherence with Mode 3. Arnkil et al. (2010:
14) further explain that “scientific knowledge is increasingly evaluated by
its social robustness and inclusivity”, that “public interest is important
in this regard” and that the fourth helix also “helps to create linkages
between science, scientists and education strategies”. Additionally, the
demand for innovating goods and services by the civil society (Afonso
et al. 2010: 2), as well as an increasingly important role of users in innova-
tion processes, further amplify the need to expand the Triple Helix (Arnkil
et al. 2010: 8). Moreover, the Quadruple Helix is said to “enable a larger
variety of innovations” since the Triple Helix “focuses on producing
high-tech innovation”, and is thereby “considered to lend itself better for
science-based high-tech companies” (Arnkil et al. 2010: 16). Instead, by
adding the fourth helix, the innovation activity “can focus on producing
other kinds of innovations and applying existing technology and research
knowledge and user knowledge as well”, increasing the possibilities for
SMEs to participate (Arnkil et al. 2010: 16). Obviously, Mode 3 is a better
fit for including a fourth helix than Mode 1 or Mode 2.

While the need to expand the Triple Helix concept has been around
for some time, the specification of what this fourth helix actually con-
sists of is still somewhat confused in academic literature. In 2010, Arnkil
et al. concluded that the Quadruple Helix is not a well-established con-
cept, listing previous research defining the fourth helix as intermediate or
innovation-enabling organisations, as the public, or as users of innovations
(Arnkil et al. 2010: 14–15). The authors concluded that since the impor-
tance of user-centred research has grown substantially, the user is the best
definition of the fourth helix. Björk (2014) on the other hand stresses the
importance of separating mediating organisations and the fourth helix, the
latter defined as “citizens and community initiatives, to which consumer
interest groups and NGOs are listed” (Björk 2014: 199). Schoonmaker and
Carayannis (2012: 557) equate the fourth helix to civil society, describing
it as “a significant global trend that defines the twenty-first century”, and
as “the arena for un-coerced collective action around shared interests, pur-
poses and values”. Thus, the fourth helix is equated to both formal insti-
tutions as well as virtual factors such as the common value of a network.
Marcovich and Shinn (2011) define the fourth helix as “society”, and as
“a general backdrop for a multitude of situations and actions”, consisting
of “interactions between groups of people, institutions and knowledge”.
In this way, the fourth helix refers to “a selection of resources, strate-
gies, values and priorities”, and “it is the hierarchic arrangement of these
elements and their potential for combination with university, govern-
ment and enterprise that modifies the plausible horizons of innovation”
(Marcovich and Shinn 2011: 177). Carayannis and Campbell (2009,
2012) hold a similar view, defining the fourth helix as a “media-based and
culture-based public” (Carayannis and Campbell 2009: 206–207). Thus,
the Quadruple Helix concept implies a broader understanding of knowl-
edge production, involving culture, arts, media, values and lifestyle. These
factors, also including the manner in which media constructs public real-
ity, are expected to influence the creative environment in a specific region
and, in turn, the innovation system (Carayannis and Campbell 2012: 15).
Here, the interpretation of the fourth helix approaches the understandings
of “Creative Knowledge Environments” (Hemlin et al. 2004), “creative
class” and “people climate” (Florida 2002). In the view of Carayannis
and Campbell, the fourth helix highlights a demand for innovation
policy to “present” itself to the public through media, in order to seek
legitimation and justification. This is important, because “the sustain-
able backing and reinforcing of knowledge and innovation in the glocal

knowledge economy and society requires a substantive supporting of

the development and evolution of innovation cultures” (Carayannis and
Campbell 2012: 38).
How should we define the fourth helix then? The common denomina-
tor in the above definitions is that the fourth helix to different extents adds
knowledge of human life to the innovation process, alongside scientific and
technological knowledge. The political will of the government helix is
then complemented by this fourth helix, which may be represented by
users, NGOs or ordinary citizens. While the narrower definitions look for
concrete actors, the comprehension of the fourth helix as values, culture
and “the general backdrop” to innovation processes is common among
scholars. In this interpretation, one might easily imagine that the fourth
helix may be manipulated in order to form a society with a favourable
innovation climate. Specifically for the case study in this article, alterations
in the macroeconomic circumstances initiate a co-evolution of the knowl-
edge and political systems, which consequently may open up the actors in
the Triple Helix towards each other (see Fig. 8.4).
When considering the practical implementation of the Quadruple
Helix concept, one aim would be to implement it in the construction of
an innovation friendly culture. However, a more specific aim would be
the actual and purposive inclusion of society in the innovation process,
and here, some kind of mediating organisation easily comes to mind. The
Living Lab concept originates from Professor William Mitchell at MIT,

Fourth Helix Fourth Helix

Govern- Govern-
Industry ment Industry


Fig. 8.4 Alterations in the fourth helix potentially enable actors to open up
towards each other in the Triple Helix

Boston, where the organisation Media Lab was constructed to observe

users as they lived for a short time period in smart homes. In the Living
Lab model, users are at the centre of innovation offering the knowledge
of “real life contexts” with the goal of creating “innovation arenas where
multiple actors experiment in an open, real life environment” (Eriksson
et al. 2005: 27–28). Living Labs, as a methodology, is an attempt to “pro-
vide governance to user involvement in a way that can be addressed by
companies, research institutions, public organisations and policy mak-
ers” and as “a supplement to traditional cluster and regional innovation
policy” involving “a new kind of intermediary organisation to support
the involvement of users in R&D&I activities” (Arnkil et al. 2010: 27).
In their comprehensive work on the Quadruple Helix, Arnkil et al. offer
a compilation of academic literature on Living Labs, giving examples of
actual user involvement in innovation processes. For instance, the com-
pany 3  M learned from including so-called lead users, as in the case of
designing infection control materials applied to the skin, where make-
up artists contributed with methods of applying the materials in a non-
irritating manner. Similarly, Arnkil et al. (2010: 33–59) offer examples of
Living Labs involving ordinary users, online user communities, citizens and
stakeholders, for the purpose of evolving products, technologies, the public
sector, the development and growth of SMEs etc. As in the case of the
Halmstad Living Lab in Sweden and the Sekhukhune Living Lab in South
Africa, the activities of Living Labs include creating networks and enabling
the involvement of users, SMEs, public and civil organisations as well as
universities and research centres. Here, we approach a model where the
intermediate organisation is in the process of becoming a centre of general
development in terms of providing a platform for the democratisation of
innovations as well as society in general.


The technology centre KETEK in the non-university region Kokkola-
Jakobstad offer a case study where the co-evolution of the knowledge
and political systems has formed an intermediate organisation functioning
as a key player in the regional innovation system. KETEK connects firms
to knowledge production networks and has also step by step received a
significant position for general regional development. To further contex-
tualise the case, a short discussion of what may be expected of an inter-
mediate organisation in a Nordic welfare will be conducted next, then,

the empirical study is reproduced. The study of KETEK and the regional
innovation system is based on interviews with KETEK personnel, KETEK
customers (companies) and regional government actors. Additionally,
regional development documents have been studied, as well as annual
reports and strategies of KETEK.

8.4.1 A Nordic Case of Mode 3

While Mode 3 to a certain extent may be regarded as an agenda-setting
concept, it still builds on the actual evolution of the knowledge produc-
tion process in Western societies. Based on the notion of a strong element
of experimentalism and of the “enabling welfare state”, it is possible to
argue that Nordic countries provide excellent opportunities for finding
knowledge production systems similar to Mode 3, since the welfare state
is expected to search for

ways by which the state enables citizens, firms and regions to cope with
disabilities and share risks connected with experimentally out-stepping the
boundaries of routines and activities of known comparative advantages
and engaging in search for new ones, partly by connecting to international
communities of search and innovation dynamically and collaboratively.
(Kristensen 2009: 326)

Asheim (2009) conducts a theoretical discussion over the possibilities

of adapting Richard Floridas’s (2002) creative class theory to European
circumstances, and this discussion illuminates some interesting particulari-
ties of European and specifically Nordic countries. Asheim argues that the
conditions for the creative class are quite different in Europe than in the
USA, especially due to the culture and language differences in Europe,
which significantly impair labour mobility. Additionally, the more gener-
ous welfare systems especially in the Nordic countries provide better alter-
natives to moving for job opportunities, in comparison to the American
circumstances. Asheim concludes that the high mobility of the American
society provides better opportunities for creative destruction and radical
innovations in line with the STI mode of innovation. In comparison, the
more immobile working force in Europe, and especially in the Nordic
countries, results in more stability instead of competition, and conse-
quently, incremental innovation and interactive learning in line with the
DUI mode of innovation are more common (Asheim 2009: 358). Here,

Denmark is perhaps the best example of a country where a high level of

SMEs working incrementally along the lines of the DUI innovation sys-
tem has succeeded in setting up one of the most competitive and innova-
tive economies in the world (Virkkala 2013). In Denmark, the welfare
state provides stability, security, trust and social capital, and in that manner
offers the best possible circumstances for in-house competence building
and interfirm interactive learning. Accordingly, the Nordic model displays
important similarities with the Mode 3 and Quadruple Helix concept,
especially regarding the emphasis on the importance of social cohesion for
developing innovations (Asheim 2009: 357–358).
When moving on to the case study in the next section, it is important to
keep in mind the direct influence the society system exercises on innova-
tion development performance, as suggested in the above narrative. The
description of the evolution of the technology centre KETEK illustrates
how changes in the political and knowledge systems may calibrate a very
immature regional innovation system.

8.4.2 The Case Study: KETEK and the Kokkola-Jakobstad

Keskipohjanmaan teknologiapalvelukeskus (KETEK) is a technology
service centre, based in the city of Kokkola, which specialises in the
development of company competence. The region Kokkola-Jakobstad
has approximately 100,000 inhabitants and is situated well outside the
so-called growth triangle in the south west of Finland. Although the
university consortia Centria is present in the region, it basically lacks a
regionally governed university. KETEK is one of 29 technology cen-
tres in Finland associated with the Finnish Science Park Association
TEKEL. Furthermore, KETEK has acted as one out of 21 centres belong-
ing to the OSKE, a government programme aimed at focusing regional
resources and activities on development areas of key national importance.
The Kokkola-Jakobstad region has long traditions in boat manufacturing
and the chemical industry.

8.4.3 Development Path of KETEK

The Kokkola Institute of Technology, a secondary school, founded
KETEK as a subordinate unit of the school. The aim was to establish a
direct connection between the school and the businesses in the region.

By offering the use of technical testing equipment, KETEK managed to

attract a few companies, and thereby simultaneously obtained feedback
links to the education programmes. In the early years, the operations of
KETEK were small in scale and not very specialised, loosely focusing on
chemistry and mechanical engineering. In 1994, there was a significant
rearrangement of the education system in the region, with the formation
of a joint municipal unit for education (KpEdu). This meant a significant
step to greater independence for KETEK, since it was re-established as a
technology centre directly subordinated to the joint municipal unit, rather
than housed by the secondary school. Simultaneously, Finland joined the
EU, giving KETEK access to EU funding. These events enabled KETEK
to construct a strategy for building its competence, and in turn its posi-
tion as a technology developer within the region. The activity of KETEK
picked up very fast: during the years 1994–1998, the number of projects
managed by KETEK grew by 5–15 per year. In 1998, the knowledge
and innovation system of the region saw another significant improvement
when the university consortium Centria was founded. The regional inno-
vation system and the activity of KETEK were boosted further by the
establishment of Finnish national development programmes: OSKE in
1994 and the Regional Centre Programme (AKO) in 2000 (Fig. 8.5).
The next large step in the evolution of KETEK happened in 2007,
when KETEK was transformed into a joint stock company. The municipal
business department of Kokkola expressed the desire to enhance KETEK’s
profile both as a developer of technology and as a regional developer,
and by this allowing KETEK to obtain a more active role in the coopera-
tion with companies and other regional actors. Furthermore, there was a
general discontent that KETEK was perceived by companies as an edu-
cational unit, which was an obstacle in establishing the image of KETEK
as a competent technology developer. The aim here was also to enhance
KETEK’s profile both as a developer of technology and as a general
regional developer, thus allowing for a more active role in the cooperation
with companies and other regional actors. Simultaneously, the ownership
was diversified, since both the cities of Kokkola and Jakobstad stepped in
as shareholders, along with the educational units Kpedu and Centria. In
this way, KETEK became an unattached intermediary organisation. The
former director of KETEK makes the assessment that the transformation
to a joint stock company in all cases washed away the image of KETEK as
an educational organisation, thereby accomplishing an improved balance
between industry, business and the municipalities. The former director

Kokkola Institute of



Federation of Education in
Central Ostrobothnia


Centria education KETEK

Centria Federation of
University of City of City of Education in Central
Applied Kokkola Jakobstad Ostrobothnia
Sciences (Kpedu)


Fig. 8.5 Development of KETEK 1987 to present

maintains that being a separate unit is favourable for building competence

and thereby for raising confidence over time. The director especially men-
tions the possibility for KETEK to specialise according to company needs,
not needing to take account of educational programmes. This strategy has
led to a large increase in company collaborations, as KETEK is currently
growing at a rate of 20 % per year. After 2007, the development path of
KETEK has diverged from other technology centres in Finland. For exam-
ple, the systematic commitment to developing the fields of expertise and

accompanying laboratory equipment has gained KETEK a competence in

terms of executing experimental development and testing services, which
other technology centres in Finland are not capable of handling.

8.4.4 Fields of Expertise

The fields of expertise pertaining to KETEK were formed over the years
through close cooperation with the industry and educational institutions
of the region. The selection of expertise areas was a logical consequence
of the surroundings; KETEK still today operates mainly through the tight
connections the organisation has with the companies in the region: com-
posite, chemical and laser technology have been important areas from
1990s onwards. During recent years, nano technology as well as energy
and environmental technology have entered as new areas of expertise. The
impulse to add energy and environmental technology came from company
clients, as a consequence of tightening restrictions in their production
processes, at the same time as national strategies and funding encouraged
the development of this expertise. To date, KETEK has been able to par-
ticipate in a number of Nordic research projects in the field of energy and
environment. Regarding nano technology, the motivation to focus on this
area originated from the OSKE programme, from which KETEK has been
able to disseminate technology onward to clients.
Accordingly, the areas of specialisation were selected and formed
partly by the industry of the region and partly by the political agenda
in the EU and Finland. According to KETEK personnel, the speciali-
sation areas interact through chemistry, which is a part of all research
fields at KETEK. Laboratory equipment can also be used in multiple
research areas. However, there are a few DUI types of industries of the
region which are difficult to reach. Boat manufacturing, for example,
stands out as an industry of craftsmanship, where new innovations are
received with scepticism, and KETEK limits itself in many cases to
merely giving practical support. Nevertheless, over time, KETEK has
been able to find a few boat manufacturing companies that are willing
to take part in research projects on new technologies. On the other
hand, since nano and laser technology are fields directed by academic
research, KETEK’s task is to apply this new knowledge and communi-
cate it to its clients.

8.4.5 Research Networks

Over the years, KETEK has joined research networks with the aim of
strengthening its competence within its fields of expertise. The strategy
in the selection of partners can be interpreted as a sensibility to what
the industry of the region is in need of at the moment. Furthermore,
KETEK has sought to develop partnerships with universities and sci-
ence institutions that are prominent in their respective fields. While the
educational institutions in Kokkola are important partners to KETEK,
and both Centria and the Chydenius Institute participate in many of
KETEK’s research projects, KETEK has also recognised the need to
expand its network outside the region, as in the case of laser technology,
where Tampere University of Technology and Lappeenranta University
of Technology have become favourable collaborators. The extensive
cooperation with Tampere has also been important for chemistry, poly-
meric and composite technology. For instance, a few researchers from
Tampere University are situated at KETEK and the university partici-
pates in many of KETEK’s research projects; KETEK has even had a pro-
fessorship in laser technology jointly with Tampere University for eight
years. This collaboration resulted, among other things, in two disserta-
tions at KETEK in 2004–5. Recently, a partnership with the University
of Jyväskylä has been initiated due to its competence in nano technology.
However, international connections have been few, only concentrating
on universities and technology centres in Sweden and Lithuania. This is
because of the fact that international development projects are hindered
by a heavy dependency on the Structural Funds of the EU, which are
directed to each member state.
The research projects of KETEK are tailored to achieve a connection
between universities and companies, so that scientific results can be put
into practice, with KETEK acting as a mediator or translator (see Fig.
8.6). This process should also work the other way around, with companies
giving feedback to academic institutions, asking for solutions and innova-
tions, and thus influencing academic research. The Executive Director of
the Regional Council of Central Ostrobothnia states that while looking
from the perspective of the public organisations, KETEK should serve as a
link between the different parts of a Triple Helix and in this way facilitate

Test ing
Academic Industry
Knowledge/ Knowledge/
Feedback Feedback

Fig. 8.6 KETEK acting as a mediator between universities and industry

8.4.6 Industry Collaboration

The main task of KETEK today is technology development and problem
solving for its customers—the industry of the region and elsewhere. The
extensive laboratory is especially beneficial for SMEs, who are not able to
purchase expensive testing equipment for themselves. In this way, the char-
acter of the innovation process is often incremental. KETEK handles com-
pany cooperation both through direct services and through joint research
projects. Company participation in projects is essential to KETEK, since
this is considered to be the best way of receiving feedback and maintain-
ing and developing the connection to, and knowledge of, the industry in
question. However, although the recognition for a need of investigation
or an innovation opportunity often arises through this interaction with
companies, in most cases research projects originate from KETEK itself,
with companies later being given the opportunity to take part. In some
cases, though, a company can be the instigator of TEKES-funded projects.
Nano technology is an area where companies often have limited knowl-
edge, and as KETEK is part of the nano cluster of the OSKE programme,
one task of KETEK is to present application suggestions of nano technol-
ogy. Thereby, the operations of KETEK are definable as a combination of
DUI and STI.  When usable innovations are obtained, KETEK is able to
diffuse these ideas to company clients. According to the former director of
KpEdu, this happened in the laser technology collaboration KETEK carried
through with Fortum, a Finnish energy company, since the technology gen-
erated there could later be distributed to the metal industry in the region.
Although KETEK has a set of regular customers who participate in
research projects and buy testing services on a regular basis, KETEK is also
continuously seeking new business partners. Today, 200–250 companies
are customers of KETEK annually, of which the vast majority are SMEs.
About 50  % of these customers are situated in the Kokkola-Jakobstad

Impacts in

Innovative Industry in
cooperation Kokkola-
Jakokbstad + Growth of
Applied firms
+ Recognising
innovation + New firms
KETEK Development + Jobs
+ Development
+ Innovation
Services: ability

Fig. 8.7 Innovation network in Kokkola-Jakobstad. Interpretation of Niemi and Virkkala (2006: 48)

region, with the other half being located in other parts of Finland (KETEK
does not have international clients at present). Testing services are mar-
keted all over Finland, but most company cooperation originates from
the network and knowledge of the personnel of KETEK, which often
are picked from the regional industry. When a useful innovation occurs
in a project, the participating company has the primary right to file pat-
ent applications. In instances where companies house their own research
departments, KETEK is able to offer complementary analyses, since the
equipment of KETEK is highly specialised. Along with its scientific excel-
lence (KETEK employs six–seven people with a PhD degree), the labora-
tory equipment allows for more in-depth research than most companies
are capable of handling.
When KETEK was established as a joint stock company, only public
organisations were allowed to enter ownership. This setup, with com-
panies acting only as customers and not owners, allows KETEK to deal
with trade secrets in company collaborations, at the same time as KETEK
personnel are permitted to move and work temporarily at different com-
pany laboratories. This is an outspoken strategy of KETEK: companies
purchase laboratory services at KETEK, but KETEK employees are at the
same time able to serve at company laboratories or at HEI laboratories.
This is a conduct appreciated by the employees at the same time as knowl-
edge and science are circulated in the network (Fig. 8.7).

8.4.7 KETEK as an Actor in Regional Development

As KETEK is the only technology development centre in the Kokkola-
Jakobstad region, it possesses an important position in regional develop-
ment. The strategy of the city of Kokkola includes tasks for KETEK to
fulfil in the development of the city and the region. KETEK has partici-
pated in the planning of regional strategies, such as the regional strategy
of Ostrobothnia, the regional strategy of Central Ostrobothnia and the
strategy of the city of Kokkola. Consequently, chemistry, laser technology
and boat manufacturing have been part of these strategies for a long time.
The assessment of the former director of KETEK is that since KETEK
became an independent unit, the opportunities of the centre to influence
these strategies have improved.
As mentioned earlier, although the activity of KETEK is mainly decided
through the interplay with companies, the municipalities and other
regional actors do have the possibility for input through the directorate

of KETEK, where the cities of Kokkola and Jakobstad and some company
managers have a seat on the board. For instance, when initiating the envi-
ronmental operations, KETEK consulted the city of Kokkola and KpEdu
about their views on whether this was something that KETEK should
engage in. Another example of an interest of regional development is the
finding of lithium deposits in the region, which initiated the construction
of an accumulator laboratory at KETEK, which in turn may lead to invest-
ments in this field in the future. The position of KETEK as an innovator in
the region allows for such opportunities of development based on regional
resources to be picked up. On the other hand, regional actors such as the
Regional Council are able to influence the activities of KETEK through
the granting of project funding. The Executive Director of the Regional
Council of Central Ostrobothnia makes the estimation that KETEK is
able to decide about half of their activity, while the other half is decided
by the Regional development programme. Simultaneously, KETEK par-
ticipates in the planning of the Regional development programme and is
appointed to write the Regional strategy for technology in cooperation
with companies and public institutions.


In discussing the Quadruple Helix concept and the characteristics of the
Nordic welfare state above, it was concluded that the fourth helix may be
interpreted as a “general backdrop” to the innovation process, implying
that the setup of the knowledge and political systems have a direct impact
on the performance of the innovation system (Fig. 8.1). Departing from
these suppositions, there is an expectancy of finding a co-evolution of the
different systems in the case study.
In Fig. 8.8, the co-evolution of the systems is displayed. In the early
1990s, the financial crisis in Finland was met by introducing the National
Innovation System, which implied significant alterations of the position
of KETEK in the region. In the late 1990s and early 2000s, a general
regionalisation of both economic and governance structures advanced
the position of KETEK as a regional actor. There is an apparent co-
evolution happening of the three systems, all of them displaying a general
1987–1994 During this period, the NIS was adopted, and simultane-
ously, the Finnish government ordered municipalities to form regional
development organisations in order to elevate business and technology

Political Knowledge Innovation Economic Society impact

system system system system (Quadruple
Integrated Helix)
Demand for
1987 Kokkola education and DUI
STI Bank crisis
Federation of Research a
1994 Education subsection of DUI (STI) ??
(KpEdu) education General
Kokkola, Research regionalisation
2007 Jakobstad, separated from DUI + STI ?? RIS
Centria, KpEdu education

Fig. 8.8 The impact of the fourth helix on the development path of KETEK

development from the local to the regional level. One impulse here was
the rapid growth in export as a consequence of the fading Finnish bank
crisis. Regional business did not request a strengthening of KETEK, other
than indirectly through an emphasis on technology development. In edu-
cation policy, the government aimed at improving collaboration with firms
by supporting the formation of technology development institutions at
polytechnics and the foundation of uniform regional education organisa-
tions, as in the case of KpEdu. A Triple Helix evolved on the basis of the
double helix consisting of firms and universities in the 1990s, now involv-
ing also the government. Simultaneously, the knowledge system evolved
from Mode 1 to Mode 2. In this manner, KETEK was established as a
regional technology developer and coordinator of technology cooperation
between companies and education and research units, which implicated a
growing influence of the STI mode of innovation.
1994–2007 While education and business development were estab-
lished at the regional level in the early 1990s, a general regionalisation
of administration was visible in Finland after the year 1994. Regional
development to a greater extent was a regional affair handled by Regional
Councils in cooperation with regional actors through governance net-
works. Although actual regional self-governance is questionable in Finland,
a regional platform or forum was in any case established (Nordberg
2014). Regional systems of innovation were favoured in R&D funding,
by the Structural Funds and by government funding. These two factors,
the setup of a regional development platform and the reinforcement of
regional innovation, enabled KETEK to become an independent regional
developer of innovation.

The independence that came into effect in 2007 was the result of
efforts to further improve innovation competences by connecting to
R&D, thereby increasing the presence of the STI mode of innovation. At
the same time, close cooperation with firms maintained the DUI character
of the innovation process. KETEK is able to introduce STI types of inno-
vation, such as nano technology, to traditionally DUI types of industries,
such as the boat industry. Thereby, the innovation process in the region
exhibits characteristics of Mode 3, with the combination of STI and DUI,
and the mediating role of KETEK channelling R&D to the region, while
simultaneously reinforcing the network between firms and knowledge
institutions by housing professorships, thus enabling the transferability of
personnel etc.

The emphasis on metropolitan regions has been overwhelming in regional
development and innovation literature. As such, dense populations and
large resources have been perceived as prerequisites for strong growth,
especially when considering innovation processes. The Smart Specialisation
strategy of the EU, with its peer review approach, draws from the theo-
retical concepts presented in this chapter, i.e. Mode 3, the Quadruple
Helix and related variety. In all likelihood, peripheral regions with unde-
veloped innovation systems should have most to benefit from such aid.
These concepts emphasise the value of allowing both high-tech and low-
tech industries to partake in innovation processes. Although the academic
literature on innovation processes in peripheral regions has been scarce,
some suggestions have been made that small regions are better fitted for
the DUI type of innovation (Isaksen and Karlsen 2012), and at the same
time, low-tech firms are said to be vital as partners in innovation processes
(Hansen and Winther 2011). Thus, if peripheral regions get connected,
both inwards and outwards, they might stay competitive and have a role
to play in larger innovation networks. Perhaps, proximity and the pres-
ence of informal networks in small regions might even benefit adaptation
to the Quadruple Helix concept and the integration of the fourth helix in
the innovation process, thereby enhancing the impact of an intermediate
organisation and its ability to attune the region to creating innovations.
The question whether a peripheral region would be more sensitive to
a fourth helix is difficult to establish definitely. An extensive case com-
parison would perhaps shed light on this issue. Using a fictional case of

comparison, a metropolitan region could, based on the intent of a few

large companies and a large educational organisation, invest, for instance,
in coal or nuclear energy technology, although the region possesses
renewable energy resources, knowledge of using it and a public will for
sustainability. The notion is that the effects of the policy responses in the
case study, i.e. the emergence of KETEK, have a greater impact in a small
peripheral region, with perhaps a defunct innovation system. A technology
centre supported by society is able to initiate and run innovation develop-
ment in a peripheral region, and in this activity channel both political and
industrial views.
At the same time as society, understood as the macroeconomic environ-
ment and national policy, provides impulses, the case study also demon-
strates how the co-evolution of the political and the knowledge systems
alters the fourth helix and opens up the actors of the Triple Helix towards
each other. In this manner, an innovation system where an intermediate
organisation receives a central position is constructed. KETEK chooses
its areas of specialisation through a dialogue with the local industry and
authorities, at the same time as new technologies and innovations are
accessed through innovation networks and, for instance, the OSKE pro-
gramme of the national government. The advancement of the areas of spe-
cialisation is based on existing competences within chemistry acting as a
link between all areas. Laser and nano technology are also used in different
fields, and in this manner, the activity of KETEK is somewhat definable
as furthering related variety. An important attribute of KETEK, empha-
sised repeatedly by employees in interviews, is the mobility of its employ-
ees, who are able to advance the transfer of knowledge and competence
between industries and knowledge institutions. The aim of always includ-
ing both knowledge and industry in its development projects, as well as
combining close incremental cooperation with companies (DUI) and the
search for codified scientific knowledge (STI) are all compatible charac-
teristics with both Mode 3 and Smart Specialisation Strategy. Although
KETEK has been able to bring new knowledge to the region, opening
SMEs to cooperation is perhaps the greatest achievement of KETEK. The
building of trust and long-term relationships is the key here, since SMEs
and DUI types of firms are difficult to reach in this regard. KETEK has
been especially important to SMEs, since they generally do not have the
means to engage in developing innovations. Studying the entire life cycle
of KETEK, it has certainly been able to open up the business sector to
cooperation and knowledge exchange. Another lesson of the KETEK

case is the chosen independence of the organisation, by avoiding having

companies as owners in order to engage in confidential partnerships, and
distancing itself from education in order to raise the profile as a com-
pany client. Additionally, the profile as an independent actor has enabled
KETEK to voice its opinion and to become an actor for general regional
In the academic literature of the Quadruple Helix model, the fourth
helix has been defined both as “a general backdrop” and as specific actors,
such as users of technology and NGOs. One of these need not neces-
sarily exclude the other, although the first interpretation could be per-
ceived as a passive entity while the other refers to active participators. On
the contrary, the fourth helix, understood as a “creative knowledge envi-
ronment”, implies that society in general is activated, and here, the first
interpretation coalesces with the other. Accordingly, if an intermediate
organisation should act in accordance with the Quadruple Helix model,
the organisation should promote both the inclusion of firms, citizens and
users while simultaneously improving the knowledge environment. Even
though this case study has succeeded in including firms, in order to cor-
respond to the model of a Quadruple Helix intermediate organisation, the
next step could be to include users and citizens in a Living Lab concept.
As depicted in this chapter, certain changes in society resulted in policy
responses introducing R&D as central to general regional development.
Here, a Quadruple Helix intermediate organisation belongs at the centre
of development, activating society and channelling all kinds of knowledge
and preferences.

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One main feature distinguishing the globalised post-Fordist society from

the Keynesian Fordist one is the presence and significance of functional
regions, acting out of self-interest and often disregarding both national
borders and policy. This is of course in line with the economic logic of
this era: local and regional bodies should strive to improve their global
competitiveness and prosper on their own right. However, this setup has
also brought about the million-dollar question in social science today:
how could democratic accountability structures and mechanisms be cre-
ated that take notice of these functional and borderless networks?
Humans are fundamentally social beings, constantly seeking affinity
and social context. The functional and flexible, rather than static and ter-
ritorial, characteristics of societal features, as well as the increased mobility
of people, certainly complicate community formation. To illustrate this
point, consider the way employment has changed during recent decades.
Previously, employment often lasted a lifetime; the profession and the
colleagues formed an important part of the identity of the person and his
or her social belonging. Now, part-time employments, a proliferation of
temporal project recruitments and a general fluidity of the workforce have
changed the social function of employment. When the forces of globalisa-
tion without detour or mediation touch local communities, it seems that

© The Author(s) 2017 219

K. Nordberg, Revolutionizing Economic and Democratic Systems,
Palgrave Studies in Democracy, Innovation, and Entrepreneurship
for Growth, DOI 10.1007/978-3-319-40633-6

certain mechanisms lead up to a questioning of the national elite, and

finally result in turbulence in society. Sadly, and a bit paradoxically, the par-
allel proliferation of ICT seems to have only amplified rather than alleviated
this turbulence. The collective knowledge of the world is now available in
almost every person’s pocket, a fact that may be regarded as nothing less
than a paramount democratisation of knowledge. This empowerment of
knowledge should be a great asset to society, but instead, it often appears
to result in a general defiant attitude and a weakened authority position.
Government top-down steering just seems to be the wrong strategy under
these circumstances.
The question posed to social science is extremely complex, but at the
same time cannot remain unanswered. In people’s search for context, fun-
damentalist and populist movements are gaining ground, offering solu-
tions involving closed borders and gated communities. The necessity to
choose between tribalism and cosmopolitanism just is not a good option,
since we essentially want both: we want to live in open borderless societies
where people are able to shape their lives at their own discretion, at the
same time as we want the sense of belonging local social contexts offer.
The answer to the question posed is closely connected to the individualisa-
tion of society and seems to involve the empowerment of citizens, in other
words, citizens having a part to play in local governance.
The great contemporary challenges are strikingly global to their
nature—climate change, growing inequality and migration are issues that
must be addressed on an international level. These challenges seem to
boil down to two main issues: how can we achieve (1) growth in a finite
world and (2) democracy in a multilevel, borderless world? The multilevel
aspect is fundamental for a global society to function, and although these
challenges must be met globally, the implementation will always be local.
Unresponsive top-down steering may even counteract the intended objec-
tive, as is well illustrated by the example of environmental protection. In
the literature of the management of natural resources, the necessity of
involving locals is well evidenced (see e.g. Holling et al. 1998). Mere leg-
islative protection of certain territories or species without any communi-
cation with local communities may easily render locals to oppose the law
and even destroy the natural values they sought to protect. Enlightening
the local communities about circumstances relating to the local environ-
ment is still only one half of the value of inclusion in this matter. The other
involves the fact that often, the knowledge of ecosystems is not universal,
since every ecosystem may hold local specificities, and obviously, only local

communities may have knowledge of these special features. It is just not

possible for central governments or national research institutions to con-
tinuously update changes of the specific features of local ecosystems in
every corner of the nation—this knowledge will always primarily be local.
Additionally, when seeking growth by making use of natural resources in
simultaneously more productive and sustainable manners, as the EU is
doing through its Blue Growth strategy for instance, innovative solutions
depend on local knowledge of ecosystems.
Instances presented in this book suggest that while global challenges
must be addressed, implementation should be carried out through
empowering, legitimate and inclusive local self-governance. Setting up a
multilevel structure is complicated and a large hurdle to overcome, but
we still need to keep looking for a system that works. Digital participa-
tive platforms exhibit some promising features regarding this matter (see
e.g. Horelli 2013). Participation may through such kinds of platforms
become more continuous and accessible, at the same time as the possibil-
ity of interactive visualisation, through models or maps, offer simplifica-
tion of complicated matters. The availability and visibility opinions receive
through such platforms may serve as an impellent for civil servants to
pursue their implementation, raising the legitimacy of the whole system.
Digital platforms may also operate as hubs for innovation systems, allow-
ing researchers access to local knowledge previously hidden, and offer-
ing local entrepreneurs and decision-makers scientific ideas and solutions.
In fact, innovation systems have become central parts of the post-Ford-
ist order—the development route mapped out by innovation strategies
is certainly felt throughout society. These strategies are written on local,
regional, national and supra-national levels, instantiating the multilevel
character of the globalised society. In a way, strategies may be viewed as
soft steering mechanisms, setting up global common objectives, and by
financing opportunities, steering local and regional action in certain direc-
tions. Still, regional innovation and development strategies to some extent
offer a leeway to self-governance, and this is especially evident in the case
of the EU, whose financing strategies largely slip past national state con-
trol, offering regions alternatives when choosing development path. The
model for setting up innovation system strategies is not the complete pic-
ture here, but in a society revolving around growth, the inclusive and
democratic qualities of this system potentially play a large part in the gen-
eral legitimacy of the society system.

A large portion of this book has been devoted to explaining the reason
why direct forms of participation, introduced as responses to and alle-
viations of the legitimacy deficiency of contemporary politics, easily fall
outside of the actual decision-making apparatus. The hierarchic represen-
tative system is just not able to handle direct input in a justifiable man-
ner. Hopefully, the issues that have been highlighted here might aid in
finding an operational form for participative functional networks; at the
least, some kind of empowering of local and regional bodies seem to be

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management. In F.  Berkes & C.  Folke (Eds.), Linking social and ecological
systems, 342–362. Cambridge: Cambridge University Press.
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dencies of modern democracy, Ontario: Batoche Books.

A Keskipohjanmaan
agonism, 16, 17 teknologiapalvelukeskus
agonistic planning theory, 131, 132 (KETEK), 202
technology development centre, 209

Baltic states, 96 C
Bernstein debate, 2 Cohesion Fund (CF), 108, 121
bottom-up development, 33, 95 connectedness, 46–8, 50, 73, 80, 81,
bottom-up processes, 7, 8, 15, 29, 33, 83, 116. See also networking
50, 62, 65–7, 81, 82, 91, 92, culturification, 43
116, 123. See also bottom-up Czech Republic, 96
Bretton Woods, 87
business development, 63, 79, 158, D
161, 167, 168, 170, 171, 174, decentralisation, 4, 74, 88, 92–4, 95,
175, 178, 179, 181, 182, 211 97, 99–101, 115, 122
business development agency, 158, democracy theory, 8, 9, 11, 53
167, 170, 174, 175, 179, 181, accountability, 23–5, 27, 128,
182 135–9, 145–7, 149, 151, 153,
intermediate organization, 80–2, 165, 166 (see also
185–214 (responsibility))

© The Author(s) 2017 223

K. Nordberg, Revolutionizing Economic and Democratic Systems,
Palgrave Studies in Democracy, Innovation, and Entrepreneurship
for Growth, DOI 10.1007/978-3-319-40633-6

decentralisation (cont.) European Regional Development

aggregative democracy, 9, 20, 63 Fund (ERDF), 73, 102, 108,
audience democracy, 12–15, 17, 19, 110, 118, 120, 175
20, 50, 51 European Social Fund (ESF), 73
classical democracy, 8, 10, 19, 20 European Union (EU), 26, 35, 37,
deliberative democracy, 23, 128, 40, 44, 53, 62, 66–8, 69, 72, 73,
132, 133, 137, 138, 142, 150, 75–7, 80, 82, 91, 92, 94–6,
151, 153 100–4, 105, 108, 109, 111, 113,
demos, 8, 9, 12, 16, 17, 20, 50 116, 117, 120–2, 161, 162, 168,
integrative democracy, 9, 18, 20 170, 172, 185, 203, 205, 206,
legitimacy, 8, 11, 23, 24, 29, 51–3, 212, 221. See also Cohesion Fund
74, 77, 89, 92, 99, 122, (CF); European Agricultural Fund
127, 133, 134, 138, 149, for Rural Development (EAFRD);
151, 152, 167 European Maritime and Fisheries
liberal democracy, 8–12, 15, 16, Fund; European Regional
18–20, 23–6, 51–3, 128, Development Fund (ERDF);
150, 151 European Social Fund (ESF)
parliamentary democracy, 12, 13, additionality principle, 95
20, 51 Common Agriculture Policy (CAP),
participation, 9–11, 16–20, 22–4, 102
28, 49, 50, 52, 53, 62–4, 66, Community Led Local
73, 77, 82, 83, 89, 93, 96, Development (CLLD), 110
122, 127, 131–3, 137–9, LEADER programme, 62, 102,
141–3, 145, 147, 149, 150, 104, 110, 116
153, 165, 166, 172, 188, 207, local action group, 105, 110
221, 222 Smart Specialisation Strategy, 40,
parties democracy, 12, 14, 20, 51 67, 109, 185, 212, 213
post-liberal democracy, 9, 11, Structural Funds Programme, 95–7,
15–20, 27, 51, 52, 89, 122 100–2, 104, 110–12, 113, 116,
representative democracy, 8–10, 118, 119, 129, 162, 163, 170,
11–17, 20, 24, 99, 134, 135, 206, 211
137, 153 experimentalism, 67, 187, 201

ELY-centre, 62, 73, 105, 108, 109, Finnish Funding Agency for Technology
112, 114, 117, 118, 141, 143, and Innovation (TEKES), 111,
162, 163, 174 120, 163, 202, 207
environmental protection, 220 Florida, Richard, 44, 46, 59, 198, 201
European Agricultural Fund for Rural Fordism, 29–31, 32–6, 48, 51, 64,
Development (EAFRD), 104, 190, 191
108, 110 post-Fordism, 29, 32–6, 48, 51, 190
European Maritime and Fisheries Fund Founding Fathers, 8, 10, 11
(EMFF), 108 functional networks, 88, 99, 222

G innovation modes, 40, 187, 190–2,

geoeconomic practices, 98 194, 196, 197
geopolitical practices, 98 innovation systems, 35, 37, 43, 47,
Giddens, Anthony, 3, 50 48, 50, 67, 80, 185,
globalisation, 16, 20, 21, 34, 62, 64, 187–200–2, 203, 210–12, 213
66, 68, 85–91, 93, 98, 109 Innovative Cities Programme
hyperglobalisation, 85, 86 (INKA), 66, 110, 111, 113,
governance, 1, 2, 4, 7, 8, 11, 15–29, 115, 120
33, 38, 43, 46, 48, 49, 51–3, 54, National Innovation Systems (NIS),
127–53 64–6, 67, 72
governance networks, 8, 16, 23–5, Quadruple Helix, 47, 53, 185–214
27, 28, 51–3, 60, 62, 75, 77, Quadruple Helix Intermediate
78, 80, 81, 88, 89, 100, Organisation, 185–214
127–53, 159, 189, 211 regional innovation systems, 185,
governance network theory, 24, 127, 186, 190, 196, 200–2, 203, 211
128, 133–8, 149, 150, 152 Triple Helix, 47, 53, 74, 80,
metagovernance, 23–6, 27–9, 49, 81, 186, 189, 197–9,
51, 52, 54, 60, 82, 88, 89, 206, 211, 213
135, 136, 138, 140, 141, 149 institutional thickness, 45
Multi-level governance, 92, 94–7 iPhone, 41–3, 48
New Governance, 7, 8, 16, 19–29,
33, 48, 49, 51, 62
self-governance, 16, 17, 25, 52, 61, J
73, 77, 106, 129 Jessop, Bob, 25, 33, 35, 36, 43, 44,
51, 76, 88, 97, 158, 181

identity, 9, 14, 22, 97, 98, 121 K
regional identity, 97, 98 Keynesian economy, 20, 89
individualisation, 13, 19 Fordist-Keynesian state, 33
industrial restructuring, 158–60, 163, Keynesian welfare state, 32, 33, 35,
165, 166, 172 51, 67, 75, 93
restructuring legislation, 159, 172, 180 knowledge, 14, 17, 27–9, 30, 32, 34,
restructuring policy, 158, 159, 36–48, 50–2, 53, 59, 60, 65, 75,
163–72, 179 77, 80, 81, 93, 94, 103, 109,
innovation, 1, 29–32, 34–40, 43, 44, 220, 221
47, 48, 50, 53, 60, 64–6, 67, 70, diversified knowledge bases, 38,
72, 73, 80–2, 87, 93, 104, 187, 190–2, 194, 195
109–11, 120, 185–200–2, 203, knowledge economy, 36–8, 44, 51,
205–13, 221 52, 185, 187, 190, 199
Centre for Expertise Programme knowledge networks, 185, 186,
(OSKE), 103, 105, 110, 111, 190, 191, 195
113, 115, 117, 123, 163, 202, knowledge society, 14 (see also
203, 205, 207, 213 (knowledge paradigm))

knowledge (cont.) Nordic welfare state, 61, 67,

local knowledge, 27, 28, 48, 50, 51, 68, 210
149, 151, 195 Norway, 69, 78, 79, 152, 157–70,
Mode 3 Knowledge Production 176–9, 181
System, 47, 186, 190, 193–6 Scandinavia, 60, 61, 77, 78
paradigm, 29, 32, 37, 38, 195 Sweden, 61, 69, 200, 206
Kondriatev waves, 29–32, 47, 50 unitary states, 60, 74, 91, 96, 160

learning, 27, 28, 33, 36, 40, 43–7, 48, Ostrobothnia, 59–83, 92, 101–3,
51, 53, 69, 70, 73–5, 78–80, 113–15, 117, 118, 120–2,
91–123, 191, 192, 201, 202 127–53, 157, 158, 170, 173–6,
learning regions, 36, 40, 43–7, 53 177–81, 204, 206, 209, 210
localised learning, 36, 44–6 Kaskö, 157, 158, 170, 171,
policy learning, 27, 28, 53 173–81, 182
SECI model, 177, 179 Kokkola-Jakobstad region, 71, 80,
social learning, 27, 28 81, 186, 202, 209
transnational learning, 27, 28, 157–82 Southern Ostrobothnia, 78, 114,
Living Labs, 200 157, 170, 173–5, 177–81 (see
also (Syd-österbotten))
Vaasa region, 70–2, 113–15, 120
Manin, Bernard, 9–15
Metsä-Botnia, 171, 173–5, 176, 179 P
modernism, 19, 51 path dependency, 63, 76, 81, 97, 121,
post-modernism, 29, 51 158–60, 181
planning theory, 128, 131, 132, 138
pluricentrism, 15, 29, 50, 52, 81
N Polanyi, Karl, 2, 85
neoliberalism, 7, 21, 22, 33 Programme for Cohesion and
networking, 37, 38, 43, 48, 50, 60, Competition (KOKO), 105,
67, 100, 101, 116, 117, 122, 112–14, 117, 119, 120, 122
165, 191, 192 public administration, 22, 101, 127,
Nordic countries, 67–71, 74, 78, 81, 128, 160
103, 133, 186, 201 New Institutionalism, 22
Denmark, 69, 202 New Public Management, 21
Finland, 46, 59–64, 66–76, 79, 91, New Public Service (NPS), 22, 23
92, 100–13, 114–21, 122, regional administration, 63, 73,
127–53, 157–63, 170–9, 101–3, 105–8, 128, 139, 158,
180–2, 202–4, 205, 209–11 160–3, 162, 180

R regional mobilization, 91–123

Reflexive modernization, 50 regional planning, 128–30
reflexivity, 2, 70 related variety, 40, 41, 46, 186, 187,
Regional Cohesion and 190, 192–4, 195, 212, 213
Competitiveness Programme unrelated variety, 140, 193
(COCO), 163, 170, 179. See also responsibility, 2–7, 25, 61, 62, 79,
Programme for Cohesion and 99–102, 106, 109, 111, 112,
Competition (KOKO) 134, 136, 139, 159, 161, 162,
Regional Council, 63, 70–2, 73, 75, 77, 167, 168, 171, 172, 178, 179,
100–3, 105, 106, 108–10, 112, 182
113, 115–19, 129–31, 139, 141,
143–5, 146, 148, 149, 162, 163,
174, 175, 179, 181, 206, 210, 211 S
regional development programme, Schumpeterian Workfare State (SWS),
102–5, 112, 116, 117, 127, 129, 29, 35, 51, 53, 67, 75
161, 163, 170 Slovenia, 96
regions society systems, 49, 89, 187, 188
functional regions, 98, 99, 112, systems theory, 187
121–3 (see also (functional Sörensen, Eva, 8, 9, 15–18, 23, 25, 51
networks)) strategic relational approach (SRA),
regional development, 37, 44, 48, 94–7, 121, 158, 181
51, 60–2, 65, 72, 73, 77, 78, SWS. See Schumpeterian Workfare
82, 96, 100–6, 111–13, State (SWS)
115–17, 121, 127–33, 142, Syd-österbotten, 70, 71, 73, 78–80
150, 151, 160–2, 163, 169,
170, 181, 187–90, 192, 193,
200, 201, 209–11, 212, 214 T
regionalism, 92, 97–9, 100 The Third Way, 1–4