Author: Carla Lostrangio (AEIDL)
The EU Committee of the Regions (CoR) is currently discussing an Opinion on ‘Supporting Small and Medium Enterprises in regional value chains – fostering the proximity economy’. Led by Ms Barbara Hegedűs, this Opinion provides a platform the relevance of proximity enterprises for sustainability and resilience across Europe. EU Association for Innovation in Local Development (AEIDL), building on the results of the MOVING project, provided its recommendations on how to enhance proximity economy in mountain regions.
What is Proximity Economy?
On November 2022, the European Commission published the Transition Pathway for Proximity and Social Economy, a collection of 30 specific actions to strengthen proximity economy across Europe.
As stated by the Rapporteur in her Opinion, ‘The Proximity Economy is an ecosystem based on short value chains within a close geographical area, encompassing activities of local industry and small businesses working across different economic sectors’.
Proximity economy is strictly interlinked to the Functional Area concept (urban/rural), as it denotes the flows of resources and interactions to satisfy needs in a geographical area. In this framework, short value chains can serve to foster proximity economy and become an expression of functional territories.
In rural areas, proximity economy is essential to provide services and goods to local residents, as well to encourage them to stay in these regions.
How does proximity economy contribute to mountain resilience?
Proximity economy is crucial to maintain and enhance the socio-economic fabric of regions and generate an attractive ecosystem for resources and people in particular rural, mountainous and remote ones (and other territories under Art 174 TFEU).
The MOVING project exemplifies the crucial contribution of proximity economy to mountain resilience by the means of mountain value chains. As shown by MOVING 23 Value Chains, proximity economy contributes to enhance the social, economic and environmental values of territories.
By an economic angle, it provides income and tax inflows, strengthen local jobs and attract investments. In social terms, it slows depopulation, strengthen territorial identity, skills and social capital, and preserve cultural heritage. It can also contribute to sustainable resource management preserving biodiversity and leading the transition to more eco-friendly techniques if correctly framed.
In mountain regions, social economy is an integral part of proximity economy. For instance, local certified ecotourism practices in Romania and multifunctional farming in Czechia dispatches economic, social and environmental benefits in mountain regions. Furthermore, social networks and cooperatives often act as fundamental enablers of mountain value chains and the local economy (e.g. Weizer Bergland cooperative).
How can local and regional authorities contribute to and benefit from proximity economy?
Local and regional authorities have the crucial role to develop conducive policy environments and support local actors in their innovation practices. A few recommendations to proceed in this direction are:
- To enhance regional embeddedness and networking for integrated regional/rural development, particularly supporting assemblage (connect multiple Value Chains across different sectors) and tele coupling (making Value Chains integrated to other VCs beyond their own territory)
- To contribute to the creation of proximity markets and commercialisation channels for the sale of local and short value chains.
- To support regional branding, marketing schemes and designation of origins, these can be very effective if support for the necessary skills and cooperation is also provided (e.g. “Biovallé” territorial brand)
- Tu support the upgrading and upscaling of Value Chains through conducive policy frameworks and skill development skills
- To promote foresight as a strategic approach to drive towards new and future-proof business models for the proximity economy
- To enhance the role of cooperatives, crucial in strengthening collective efforts and innovation capacities, and contribute defining a local governance of the commons
- To ensure that integrated strategies and tools, (e.g. mountain strategies, mountain laws, CLLD/LEADER) approach are and should be further use to unleash proximity economy while matching it with the social economy potential.
How can EU institutions contribute to the prosperity and resilience of the proximity economy?
The EU Cohesion Policy and Common Agricultural Policy – Pillar II, LEADER/CLLD– are key to offer direct and indirect support to develop an ecosystem based on proximity economy services and goods. Recognising the role of localised value chains as a criterion for delivering socio-economic and environmental value should be integrated in such policies.
Furthermore, the EU Promotion Policy, EU Geographical Indications and Quality Schemes can contribute to give visibility to local products and their added value to triple bottom line. In this respect, the recently announced EU Agrifood Value Observatory will be key to understand gaps and needs in Europe’s value chains, and its potential for proximity economy, and fair remuneration along the value chain.
Other EU funding programmes, such as Horizon projects and Missions, Interreg, Erasmus+ should contribute to promote cross-country projects to promote exchange of practices and cooperation. Furthermore, more composite principles and rules to public procurement going beyond the solely ‘best value for money’ criteria (e.g. Socially Responsible Public Procurement, Gender Public Procurement and Green Public Procurement) – should be set to privilege more localised value chains with high socio-economic and environmental values (positive externalities).
Next steps
A stakeholder consultation will be held on 16 September to discuss the Ms Hegedűs’ Opinion. The Opinion will next be voted in the ECON commission meeting on 11 December, before going to the CoR plenary session in April 2025.
In the meantime, a wider set of policy recommendations from the MOVING project is available at this link.