Regional policy design: An analysis of relocation, efficiency and equity
AbstractDespite substantial regional expenditures at both national and community level, European regional policies do not appear to deliver. The evidence suggests that neither efficiency gains nor reduced regional inequalities are attained. If there is any positive impact at all, then it is at the most a redistributional one. If transfers are mainly redistributional in nature, would policies based on non-distortionary financing be a better route to follow? We ask what are the alternatives to a distortionary regional policy forcing the delocation of activity. Are non-distortionary policies always more efficient than distortionary alternatives? We analyse these questions employing a new economic geography model, where we also take into account the importance of knowledge spillovers for productivity, industry location and policy. It is shown that the effectiveness of different regional policy depends on (i) intra-industry knowledge spillovers, (ii) inter-industry knowledge spillovers, and (iii) trade costs. Our analysis provides insight into what may be the reason for the lack of success of EU regional initiative.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal European Economic Review.
Volume (Year): 51 (2007)
Issue (Month): 6 (August)
Contact details of provider:
Web page: http://www.elsevier.com/locate/eer
Other versions of this item:
- Ulltveit-Moe, Karen-Helene, 2004. "Regional Policy Design: An Analysis of Relocation, Efficiency and Equity," CEPR Discussion Papers 4321, C.E.P.R. Discussion Papers.
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
- R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
- R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
- R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Duranton, Gilles & Puga, Diego, 2003.
"Microfoundations of Urban Agglomeration Economies,"
CEPR Discussion Papers
4062, C.E.P.R. Discussion Papers.
- Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117 Elsevier.
- Giles Duranton & Diego Puga, 2003. "Micro-Foundations of Urban Agglomeration Economies," NBER Working Papers 9931, National Bureau of Economic Research, Inc.
- Dixit, Avinash K & Stiglitz, Joseph E, 1975.
"Monopolistic Competition and Optimum Product Diversity,"
The Warwick Economics Research Paper Series (TWERPS)
64, University of Warwick, Department of Economics.
- Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
- Ciccone, Antonio, 2002.
"Agglomeration effects in Europe,"
European Economic Review,
Elsevier, vol. 46(2), pages 213-227, February.
- Martin, Philippe & Ottaviano, Gianmarco Ireo Paolo, 1996.
"Growth and Agglomeration,"
CEPR Discussion Papers
1529, C.E.P.R. Discussion Papers.
- Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2008.
"Spatial wage disparities: Sorting matters!,"
Journal of Urban Economics,
Elsevier, vol. 63(2), pages 723-742, March.
- Patricia Rice & Anthony Venables, 2003. "Equilibrium Regional Disparities: Theory and British Evidence," Regional Studies, Taylor & Francis Journals, vol. 37(6-7), pages 675-686.
- J.Peter Neary, 2001.
"Of Hype and Hyperbolas: Introducing the New Economic Geography,"
Journal of Economic Literature,
American Economic Association, vol. 39(2), pages 536-561, June.
- J. Peter Neary, 2000. "Of Hype and Hyperbolas - Introducing the new Economic Geography," Working Papers 200019, School Of Economics, University College Dublin.
- Philippe Martin, 1998. "Can Regional Policies Affect Growth and Geography in Europe?," The World Economy, Wiley Blackwell, vol. 21(6), pages 757-774, 08.
- Ludema, Rodney D & Wooton, Ian, 1998.
"Economic Geography and the Fiscal Effects of Regional Integration,"
CEPR Discussion Papers
1822, C.E.P.R. Discussion Papers.
- Ludema, Rodney D. & Wooton, Ian, 2000. "Economic geography and the fiscal effects of regional integration," Journal of International Economics, Elsevier, vol. 52(2), pages 331-357, December.
- Rodney D. Ludema & Ian Wooton, 1998. "Economic Geography and the Fiscal Effects of Regional Integration," International Trade 9801001, EconWPA.
- Rodney D. Ludema & Ian Wooton, 1998. "Economic Geography and the Fiscal Effects of Regional Integration," Working Papers 9809, Business School - Economics, University of Glasgow.
- Michele Boldrin & Fabio Canova, 2001. "Inequality and convergence in Europe's regions: reconsidering European regional policies," Economic Policy, CEPR & CES & MSH, vol. 16(32), pages 205-253, 04.
- Bottazzi, Laura & Peri, Giovanni, 2003.
"Innovation and spillovers in regions: Evidence from European patent data,"
European Economic Review,
Elsevier, vol. 47(4), pages 687-710, August.
- Laura Bottazzi & Giovanni Peri, . "Innovation and Spillovers in Regions: Evidence from European Patent Data," Working Papers 215, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Behrens, Kristian & Gaigné, Carl & Ottaviano, Gianmarco Ireo Paolo & Thisse, Jacques-François, 2003. "Inter-regional and International Trade: Seventy Years After Ohlin," CEPR Discussion Papers 4065, C.E.P.R. Discussion Papers.
- Paul Krugman, 1990.
"Increasing Returns and Economic Geography,"
NBER Working Papers
3275, National Bureau of Economic Research, Inc.
- Gordon, Roger H, 1986. "Taxation of Investment and Savings in a World Economy," American Economic Review, American Economic Association, vol. 76(5), pages 1086-1102, December.
- Jacob Frenkel & Assaf Razin & Efraim Sadka, 1991.
"International Taxation in an Integrated World,"
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 0262061430, January.
- Shields, Gail M & Shields, Michael P, 1989. " The Emergence of Migration Theory and a Suggested New Direction," Journal of Economic Surveys, Wiley Blackwell, vol. 3(4), pages 277-304.
- CHARLOT, Sylvie & GAIGNE, Carl & ROBERT-Nicoud, Frederic & THISSE, Jacques-François, .
"Agglomeration and welfare: the core-periphery model in the light of Bentham, Kaldor, and Rawls,"
CORE Discussion Papers RP
-1857, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Charlot, Sylvie & Gaigne, Carl & Robert-Nicoud, Frederic & Thisse, Jacques-Francois, 2006. "Agglomeration and welfare: The core-periphery model in the light of Bentham, Kaldor, and Rawls," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 325-347, January.
- Charlot, Sylvie & Gaigné, Carl & Robert-Nicoud, Frédéric & Thisse, Jacques-François, 2004. "Agglomeration and Welfare: The Core-Periphery Model in the Light of Bentham, Kaldor and Rawls," CEPR Discussion Papers 4715, C.E.P.R. Discussion Papers.
- CHARLOT, Sylvie & GAIGNÉ, Carl & ROBERT-NICOUD, Frédéric & THISSE, Jacques, 2003. "Agglomeration and welfare : the core-periphery model in the light of Bentham, Kaldor, and Rawls," CORE Discussion Papers 2003039, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Bucovetsky, Sam & Wilson, John Douglas, 1991. "Tax competition with two tax instruments," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 333-350, November.
- Karen Helene Midelfart-Knarvik & Henry G. Overman, 2002. "Delocation and European integration: is structural spending justified?," Economic Policy, CEPR & CES & MSH, vol. 17(35), pages 321-359, October.
- Forslid, Rikard, 2003. "Regional Policy, Integration and the Location of Industry," Research Papers in Economics 2003:7, Stockholm University, Department of Economics.
- Becker, Johannes & Fuest, Clemens, 2010.
"EU regional policy and tax competition,"
European Economic Review,
Elsevier, vol. 54(1), pages 150-161, January.
- Sheard, Nicholas, 2011.
"Regional Policy in a Multiregional Setting: When the Poorest are Hurt by Subsidies,"
Research Papers in Economics
2011:11, Stockholm University, Department of Economics.
- Nicholas Sheard, 2012. "Regional policy in a multiregional setting: when the poorest are hurt by subsidies," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 148(2), pages 403-423, June.
- Dietmar Meyer & Jörg Lackenbauer, 2005. "EU cohesion policy and the equity-efficiency trade-off - Adding dynamics to Martin's model," ERSA conference papers ersa05p564, European Regional Science Association.
- Joeri Gorter & Albert Van der Horst, 2005.
"New Economic Geography, Empirics, and Regional Policy,"
ERSA conference papers
ersa05p236, European Regional Science Association.
- Joeri Gorter & Albert van der Horst & S. Brakman & H.F.L. Garretsen & M. Schram, 2005. "New economic geography, empirics, and regional policy," CPB Special Publication 56, CPB Netherlands Bureau for Economic Policy Analysis.
- Alexiadis, Stilianos & Eleftheriou, Konstantinos, 2010. "The ‘Trade-off’ between Spatial Equity and Economic Efficiency Revisited: Evidence from the US States," MPRA Paper 24372, University Library of Munich, Germany.
- Gallo, Fredrik, 2006.
"Resisting Economic Integration when Industry Location is Uncertain,"
2006:22, Lund University, Department of Economics.
- Gallo, Fredrik, 2010. "Resisting economic integration when industry location is uncertain," European Economic Review, Elsevier, vol. 54(3), pages 467-482, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.