Challenges in modeling the impacts of modern development policies: The case of the GMR-approach

Two modern approaches to development policy have recently evolved and dispute with each other, the space-neutral and the place-based approaches Perhaps the most notable conceptual development common in these modern approaches is a strong awareness of the key role of geography in policies targeting aggregate economic growth. It became clear in new policy thinking that the impact of countries' structural policies largely depends not only on the specific instruments (e.g., human capital development, infrastructure investments, SME support) applied but also on the concrete geographic patterns in which these instruments are deployed geographically. It is suggested in this paper that economic models that integrate both the national and regional levels could usefully help policymakers in their choice of a particular geography-instrument mix. I survey the most important modeling challenges raised by modern economic development. To illustrate how economic models can respond to these challenges I briefly introduce the GMR economic modeling approach with a policy analysis application. integrated macro and regional modeling As indicated above it is a conceptual paper with an example application