Andrés Rodríguez-Pose

THE CASE FOR REGIONAL DEVELOPMENT INTERVENTION: PLACE-BASED VERSUS PLACE-NEUTRAL APPROACHES

The paper examines the debates regarding place-neutral versus place-based policies for economic development. The analysis is set in the context of how development policy thinking on the part of both scholars and international organizations has evolved over several decades. Many of the previously accepted arguments have been called into question by the impacts of globalization and a new response to these issues has emerged, a response both to these global changes and also to nonspatial development approaches. The debates are highlighted in the context of a series of major reports recently published on the topic. The cases of the developing world and the European Union are used as examples of how in this changing context development intervention should increasingly focus on efficiency and social inclusion at the expense of an emphasis on territorial convergence and how strategies should consider economic, social, political, and institutional diversity in order to maximize both the local and the aggregate potential for economic development.

Between Development and Social Policies: The Impact of European Structural Funds in Objective 1 Regions

Rodríguez-Pose A. and Fratesi U. (2004) Between development and social policies: the impact of European Structural Funds in Objective 1 regions, Reg. Studies 38, 97–113. European regional support has grown in parallel with European integration. The funds targeted at achieving greater economic and social cohesion and reducing disparities within the European Union (EU) have more than doubled in relative terms since the end of the 1980s, making development policies the second most important policy area in the EU. The majority of the development funds have been earmarked for Objective 1 regions, i.e. regions where GDP per capita is below the 75% threshold of the EU average. However, the European development policies have come under increasing criticism based on two facts: the lack of upward mobility of assisted regions; and the absence of regional convergence. This paper assesses, using cross-sectional and panel data analyses, the failure so far of European development policies to fulfil their objective of delivering greater economic and social cohesion by examining how European Structural Fund support is allocated among different development axes in Objective 1 regions. We find that, despite the concentration of development funds on infrastructure and, to a lesser extent, on business support, the returns to commitments on these axes are not significant. Support to agriculture has short-term positive effects on growth, but these wane quickly, and only investment in education and human capital – which only represents about one-eight of the total commitments – has medium-term positive and significant returns.

The global trend towards devolution and its implications.

Globalisation has been accompanied by an equally global tendency towards devolution of authority and resources from nation-states to regions and localities that takes on various forms, depending upon which actors are driving the decentralisation efforts. The existence of a general trend towards devolution also has significant implications for efficiency, equity, and administration. The authors outline first the general drive towards devolution and then proceed to examine which countries are experiencing which forms of decentralisation. A theoretical argument emphasising the role of governmental legitimacy across various tiers of government is used to explain the diversity of devolution initiatives, drawing on examples that include Brazil, Mexico, India, China, the USA, and some European countries. Having supported their model of decentralisation, the authors then examine the implications of the widespread downward transfer of power towards regions. Some of the less widely discussed pitfalls of decentralisation are presented; caution in promoting devolutionary efforts is the prescription of this paper.

Better rules or stronger communities? On the social foundations of institutional change and its economic effects

Abstract Much of the literature on the impact of institutions on economic development has focused on the tradeoffs between society and community as mutually opposed forms of institutional coordination. On the one hand, sociologists, geographers, and some economists have stressed the positive economic externalities that are associated with the development of associational or group life. Most economists, in contrast, hold that the development of communities may be a second-best solution to the development of formal institutions or even have negative effects, such as the promotion of rent-seeking behavior and principal-agent problems. Societal institutions—such as clear, transparent rules and enforcement mechanisms—are held to be universally positive for development. But there are no real-world cases in which only one of the two exists;society and community are always and everywhere in interaction. This interaction, however, has attracted little attention. In this article, society and community are conceived of as complementary forms of organization whose relative balance and interaction shape the economic potential of every territory. Changes in the balance between community and society take place constantly and affect the medium- and long-run development prospects of every territory. The depth and the speed of change depend on a series of factors, such as starting points in the interaction of society and community, the sources and dynamics of change, and the conflict-solving capacities of the preexisting situation.

On the ‘economic dividend’ of devolution

Rodríguez‐Pose A. and Gill N. (2005) On the ‘economic dividend’ of devolution, Regional Studies 39 , 405–420. Recent political and academic discourse about devolution has tended to stress the economic advantages of the transfer of power from national to subnational institutions. This ‘economic dividend’ arises through devolved administrations’ ability to tailor policies to local needs, generate innovation in service provision through inter‐territorial competition, and stimulate participation and accountability by reducing the distance between those in power and their electorates. This paper, however, outlines two related caveats. First, there are many forces that accompany devolution and work in an opposite direction. Devolved governmental systems may carry negative implications in terms of national economic efficiency and equity as well as through the imposition of significant institutional burdens. Second, the economic gains, as well as the downsides, that devolution may engender are contingent, to some extent, upon which governmental tier is dominating, organizing, propagating and driving the devolutionary effort.

Is there a global link between regional disparities and devolution

In this paper we present an examination of the possible correlation between rising income inequalities at the regional level and widespread devolutionary initiatives worldwide. When the responsibility and resource-based facets of decentralisation are taken together a marked congruency is evident between the two trends. Various spatial economic forces promote the emergence of core and peripheral regions, and devolution, by establishing the autonomy of these regions, allows these forces a greater impact. We argue that this is because decentralisation initiatives carry with them implicit fiscal, political, and administrative costs, which fall more heavily upon those regions with limited adjustment capacities, resulting in differential rates at which regions can capitalise upon the opportunities offered by devolution. The global tendency towards devolution therefore reflects a subtle, but profound, renunciation of the traditional equalisation role of national government in favour of conditions fostering economic and public competition and leading to greater development of initially rich and powerful regions to the detriment of poorer areas.

Cohesion Policy in the European Union: Growth, Geography, Institutions

Since the reform of the Structural Funds in 1989, the EU has made the principle of cohesion one of its key policies. Much of the language of European cohesion policy eschews the idea of tradeoffs between efficiency and equity, suggesting it is possible to maximise overall growth whilst also achieving continuous convergence in outcomes and productivity across Europe’s regions. Yet, given the rise in inter-regional disparities, it is unclear that cohesion policy has altered the pathway of development from what would have occurred in the absence of intervention. This paper draws on geographical economics, institutionalist social science, and endogenous growth theory, with the aim of providing a fresh look at cohesion policy. By highlighting a complex set of potential tradeoffs and inter-relations – overall growth and efficiency; inter-territorial equity; territorial democracy and governance capacities; and social equity within places – it revisits the rationale of cohesion policy, with particular attention to the geographical dynamics of economic development.

Growth, Integration, and Regional Disparities in the European Union

In this paper we challenge the ability of the conventional methods initiated by Barro and Sala-i-Martin in the early 1990s to detect actual convergence or divergence trends across countries or regions and suggest an alternative dynamic framework of analysis, which allows for a better understanding of the forces in operation. With the use of a SURE model and time-series data for eight European Union (EU) member states, we test directly for the validity of two competing hypotheses: the neoclassical (NC) convergence hypothesis originating in the work of Solow and the cumulative causation hypothesis stemming from Myrdals theories. We also account for changes in the external environment, such as the role of European integration on the level of regional disparities. Our findings indicate that both short-term divergence and long-term convergence processes coexist. Regional disparities are reported to follow a procyclical pattern, as dynamic and developed regions grow faster in periods of expansion and slower in periods of recession. At the same time, significant spread effects are also in operation, partly offsetting the cumulative impact of growth on space. Similar results are obtained from the estimation of an intra-EU model of disparities at the national level, indicating that the forces in operation are independent of the level of aggregation. Our findings challenge the view of economic growth as the main driver for a reduction of regional disparities and contribute to the growing scientific evidence that points towards the need to rethink current EU-wide regional development policies.

When Local Interaction Does Not Suffice: Sources of Firm Innovation in Urban Norway

The geographical sources of innovation of firms have been hotly debated. While the traditional view is that physical proximity within city-regions is key for the innovative capacity of firms, the literature on ‘global pipelines’ has been stressing the importance of establishing communication channels to the outside world. This paper uses a specifically tailored survey of the level of innovation of 1604 firms of more than ten employees located in the five largest Norwegian city-regions (Oslo, Bergen, Stavanger, Trondheim, and Kristiansand) in order to determine (a) the geographical dimension of the sources of innovation, and (b) the factors behind the propensity to innovate in Norwegian firms. The results stress that, while interaction with a multitude of partners within Norwegian city-regions or with other national partners has a negligible effect on firm innovation, those firms with a greater diversity of international partners tend to innovate more and introduce more radical innovations. The results also highlight that the roots of this greater innovative capacity lie in a combination of firm (size of firms, share of foreign ownership, and sector) and cultural (the level of open-mindedness of managers) characteristics.

Convergence or Divergence? Types of Regional Responses to Socio-Economic Change in Western Europe

Testing for convergence or divergence has recently become the kernel of the studies dealing with regional growth in Western Europe. The contradictory results of these analyses, however, still do not allow us to determine which is the dominant trend. This paper shows that our understanding of these processes depends on factors such as the way growth is measured and the influence of national growth on regional growth patterns. When these factors are taken into account, the analysis of the evolution of regional disparities in Western Europe in the last two decades uncovers the emergence of growth patterns that are closely related to the capacity of every space to respond to the challenges generated by the process of socio-economic restructuring.