Denmark's Municipal Reform and Efforts toward Regional Branding
June 09 (Friday) 2006
Takafumi Ikuta
Research Fellow
SUMMARY
- The map of Denmark will need major revisions beginning January 1, 2007. Due to the municipal reform scheduled to go into effect on that day, the present 14 amter (counties) will be merged into five regions, with the country's 271 kommuner (municipalities) reduced to a total of 98. The members of parliament from the new municipalities, who were elected in nationwide elections in November 2005, will stay on with the parliament members from the old municipalities until 2006 while they push forward with the transition.
- The goal of this municipal reform is to increase the efficiency and services of local governments by increasing the scale of cities and scaling down the authority of counties (or regions, beginning in 2007). The reorganization of counties into regions will shift the jurisdiction over operations that were previously run by counties-excluding hospital management-to the control of cities or the national government, meaning that counties (regions) will lose their right of taxation. The new cities will become responsible for a wide range of services for citizens.
One characteristic of Denmark's municipal reform is its speed. Beginning with a January, 2004 report presented by a government special committee, by June of the same year the outline of the proposal for reorganizing municipalities had passed through parliament. By the summer of 2005, bills related to the reform had been passed.
This municipal reform will take place simultaneously across the entire country. The reorganization of the counties is compulsory, but the reorganization (merger) of municipalities is to be decided voluntarily through discussions between municipalities. Approximately half of the municipalities have fewer than 10,000 residents, however, and the minimum number of residents required to be designated as a city has been set at 30,000. This means that many municipalities will have to search for others with which to merge. The window for voluntary merger discussions between municipalities ended in January, 2005, and a majority of neighboring municipalities merged with each other. There were a few cases where the government acted as an intermediary, and instances where municipalities with under 30,000 residents ended up being merged with government-mandated neighboring municipalities through administrative assistance were limited to the administrated islands and the outskirts of the capital.
The Debate over the Effects on Regional Branding
In recent years, interest in branding regional images in Europe has been on the rise. One cause of this interest is the intensification of inter-regional competition due to globalization. Branding enables regions to be differentiated from others, and can increase regional competitiveness by attracting people, goods, and money. Like other European nations, Denmark is no exception: a majority of Denmark's municipalities are making active efforts toward branding their regional images.
It is very common for Denmark's regional branding operations to emphasize the attractiveness of regions as residential areas. This is due to skyrocketing land prices resulting from growing populations in urban areas, which is strengthening the demand for suburban residences. For Denmark, which has limited land area, many regions are in “commuting zones”, and thus these areas are competing with each other for urban residents. Denmark's fertility rate (between 1.7 and 1.8), which is higher than Japan's, is another source of pressure on the housing market.
The municipalities reorganized under Denmark's municipal reform are faced with the pressing need to recreate the regional branding that they had heretofore cultivated. Each municipality's value portfolio will have to be adjusted in accords with the expansion of city areas, the diversification of local resources, and the changes in assumed targets (markets). Within Denmark's municipal mergers, the common pattern is for the cities-now the center of Denmark's municipal organization-to absorb surrounding municipalities. Thus, the general view for new regional images is based on the city as the center of the region. At the same time, a debate has begun regarding how to protect the identity of the surrounding municipalities that are being absorbed in this way. The reconstruction of city branding is becoming a major topic of investigation for new municipalities.
Regional Branding Must Also Be Considered in Japan's Municipal Mergers
Just like Denmark, Japan is also in the midst of merging city, towns and villages (i.e. municipal mergers). Beginning with 3,232 municipalities at the end of March 1999, by the final cutoff date for merger assistance at the end of March 2006, the number had decreased 1,821-a 40% decrease in the number of municipalities over seven years.
In contrast to Denmark, where the mergers were promoted rapidly and preceded only by the submission of general guidelines, Japan's merger assistance measures were characterized by ample fiscal measures such as special merger bonds. Because the Japanese government encouraged voluntary mergers not based on population scales, there are some small-scale municipalities that did not merge, while there are many others that opted to merge in order to receive fiscal support. However, fiscal assistance provided for mergers is a temporary thing. Considering the fact that the transfer of sufficient financial resources from the national government to the municipality is difficult to expect, even if a merger is executed, reliance on past large-scale development-style local revitalization measures will engender financial instability in the future, and thus the benefits of the merger could be lost.
In other words, merged municipalities in particular must seriously investigate regional branding. From the perspective of revitalizing local economies through differentiation with other regions, as well as the perspective of increasing resident satisfaction by establishing new local identities, it would be very beneficial to take a proactive posture toward regional branding.
In Japan as well, interest in regional branding has recently begun to flourish. There are also a growing number of examples of comprehensive branding of regional images, in addition to traditional assistance for local products' brands. Unfortunately, however, efforts by merged municipalities are not yet very active. If vigorously pursued, efforts toward regional branding by merged municipalities will contribute to further promoting structural reform in Japan by increasing long-term competitiveness. In order to reconfirm local values, we must first demand the joint creation of a cooperative framework by municipalities, companies, and citizens.
