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European Place-Based Development Policy And Sustainable Economic Agglomeration

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  • MARK THISSEN
  • FRANK VAN OORT

Abstract

The inherent tension between regional equality and economic growth (efficiency) is recently much debated in the context of place based development policy and agglomeration in the European Union. A general conclusion reached in the literature is that a policy targeted at regional equality may be harmful for economic growth. Such policy therefore should be transformed in such a way that it also promotes the mobility of both people and firms and hence facilitates the possibilities of increased agglomeration. Recent insights from economic theories suggest that agglomeration externalities are not taken into account in the migration decision of firms and people, causing the dynamic urbanisation processes to not necessarily result in a (social) welfare optimum. This is even more so if other welfare effects than GDP and product variety are taken into account. Regional economic development is not sustainable if the dynamic urbanisation processes stemming from agglomeration economies do not lead to a welfare optimum. In this paper we assess the possibility of a non-sustainable regional development path. We conclude that strong additional negative externalities of growing large agglomerations are harder to prove than negative externalities of small agglomerations becoming smaller. Moreover, the size of short run negative effects that will stimulate the migration of people has not been adequately assessed. The European Union should therefore be careful in interpreting place-based costs and benefits of growing, large agglomerations at the detriment of small regions. Copyright (c) 2010 by the Royal Dutch Geographical Society KNAG.

Suggested Citation

  • Mark Thissen & Frank Van Oort, 2010. "European Place-Based Development Policy And Sustainable Economic Agglomeration," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 101(4), pages 473-480, September.
  • Handle: RePEc:bla:tvecsg:v:101:y:2010:i:4:p:473-480
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    References listed on IDEAS

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    1. Koen Frenken & Frank Van Oort & Thijs Verburg, 2007. "Related Variety, Unrelated Variety and Regional Economic Growth," Regional Studies, Taylor & Francis Journals, vol. 41(5), pages 685-697.
    2. Rosenthal, Stuart S. & Strange, William C., 2008. "The attenuation of human capital spillovers," Journal of Urban Economics, Elsevier, vol. 64(2), pages 373-389, September.
    3. Zoltán J. Ács, 2002. "Innovation and the Growth of Cities," Books, Edward Elgar Publishing, number 2656.
    4. Diego Puga, 2002. "European regional policies in light of recent location theories," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 373-406, October.
    5. Glaeser, Edward L., 2008. "Cities, Agglomeration, and Spatial Equilibrium," OUP Catalogue, Oxford University Press, number 9780199290444.
    6. Richard Baldwin & Rikard Forslid & Philippe Martin & Gianmarco Ottaviano & Frederic Robert-Nicoud, 2005. "Economic Geography and Public Policy," Economics Books, Princeton University Press, edition 1, number 7524.
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    Cited by:

    1. Teodora Dogaru & Frank van Oort & Mark Thissen, 2014. "Economic development, place-based development strategies and the conceptualization of proximity in European urban regions," Chapters,in: Regional Development and Proximity Relations, chapter 11, pages 333-358 Edward Elgar Publishing.

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