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The Role of Public Policy in the Process of Regional Convergence

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  • Philippe Martin

    (Center for Economic Policy Research (London) (CEPR))

Abstract

This paper analyses the efficiency and the equity motives that can justify regional policies. The market failure induced by localized technological spillovers entails too little agglomeration. However, coordination failures and the fact that firms do not take into account the welfare of immobile agents entail too much agglomeration. We argue that diminishing inter-regional inequality may have an undesirable impact on inequalities between workers and capital owners in the rich region. We also analyze the short-term demand and the long term supply effects of regional policies. Finally, we argue that due to non linear effects, regional policies may be useless most of the time and very powerful in particular circumstances.

Suggested Citation

  • Philippe Martin, 2000. "The Role of Public Policy in the Process of Regional Convergence," Sciences Po publications info:hdl:2441/9328, Sciences Po.
    • Handle: RePEc:spo:wpmain:info:hdl:2441/9328
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    References listed on IDEAS

    as
    1. Philippe Martin, 1998. "Can Regional Policies Affect Growth and Geography in Europe?," Post-Print hal-03416388, HAL.
    2. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 577-598.
    3. repec:hal:wpspec:info:hdl:2441/9343 is not listed on IDEAS
    4. Philippe Martin & Gianmarco I.P. Ottaviano, 2021. "Growing locations: Industry location in a model of endogenous growth," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 1, pages 3-24, World Scientific Publishing Co. Pte. Ltd..
    5. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    6. Kiminori Matsuyama & Takaaki Takahashi, 1998. "Self-Defeating Regional Concentration," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 211-234.
    7. Scotchmer, Suzanne & Thisse, Jacques-Francois, 1992. "Space and Competition: A Puzzle," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 26(3), pages 269-286, September.
    8. Martin, Philippe & Rogers, Carol Ann, 1995. "Industrial location and public infrastructure," Journal of International Economics, Elsevier, vol. 39(3-4), pages 335-351, November.
    9. Martin, Philippe, 1999. "Public policies, regional inequalities and growth," Journal of Public Economics, Elsevier, vol. 73(1), pages 85-105, July.
    10. Philippe Martin, 1998. "Can Regional Policies Affect Growth and Geography in Europe?," The World Economy, Wiley Blackwell, vol. 21(6), pages 757-774, August.
    11. Damien Neven & Claudine Gouymte, 1995. "Regional Convergence in the European Community," Journal of Common Market Studies, Wiley Blackwell, vol. 33(1), pages 47-65, March.
    12. Henderson, Vernon & Kuncoro, Ari & Turner, Matt, 1995. "Industrial Development in Cities," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 1067-1090, October.
    13. Combes, Pierre-Philippe & Lafourcade, Miren, 2001. "Transport Cost Decline and Regional Inequalities: Evidence from France," CEPR Discussion Papers 2894, C.E.P.R. Discussion Papers.
    14. Martin, Philippe & Ottaviano, Gianmarco I P, 2001. "Growth and Agglomeration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 947-968, November.
    15. repec:hal:spmain:info:hdl:2441/9343 is not listed on IDEAS
    16. Philippe Martin, 1999. "Are European regional policies delivering?," Post-Print hal-01011168, HAL.
    17. Faini, Riccardo, 1983. "Cumulative processes of de-industrialisation in an open region : The case of Southern Italy, 1951-1973," Journal of Development Economics, Elsevier, vol. 12(3), pages 277-301, June.
    18. SCOTCHMER, Suzanne & THISSE, Jacques-François, 1992. "Space and competition," LIDAM Reprints CORE 1006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    19. JASKOLD GABSZEWICZ, Jean & THISSE, Jacques-François, 1986. "Spatial competition and the location of firms," LIDAM Reprints CORE 713, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. Wagenvoort, Rien & de Nicola, Carlo & Kappeler, Andreas, 2010. "Infrastructure finance in Europe: Composition, evolution and crisis impact," EIB Papers 1/2010, European Investment Bank, Economics Department.
    2. Michael Roos, 2003. "Internationale Integration und die Neue Ökonomische Geographie," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 4(1), pages 107-121, February.
    3. repec:got:cegedp:17 is not listed on IDEAS
    4. Paul Chiambaretto & André De Palma & Stef Proost, 2013. "A normative analysis of transport policies in a footloose capital model with interregional and intraregional transportation costs," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(3), pages 811-831, December.
    5. Sandy Dall’erba, 2005. "Distribution of regional income and regional funds in Europe 1989–1999: An exploratory spatial data analysis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 39(1), pages 121-148, March.
    6. Estache, Antonio, 2010. "Infrastructure finance in developing countries: An overview," EIB Papers 8/2010, European Investment Bank, Economics Department.
    7. Sandy Dall’erba & Julie Le Gallo, 2007. "The Impact of EU Regional Support on Growth and Employment," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 57(7-8), pages 324-340, September.
    8. Theodore Tsekeris & Klimis Vogiatzoglou, 2014. "Public infrastructure investments and regional specialization: empirical evidence from Greece," Regional Science Policy & Practice, Wiley Blackwell, vol. 6(3), pages 265-289, August.
    9. Südekum, Jens, 2002. "Subsidizing education in the economic periphery: Another pitfall or regional policies?," HWWA Discussion Papers 209, Hamburg Institute of International Economics (HWWA).
    10. Bitsch, Florian & Buchner, Axel & Kaserer, Christoph, 2010. "Risk, return and cash flow characteristics of infrastructure fund investments," EIB Papers 4/2010, European Investment Bank, Economics Department.
    11. Sandy Dall’erba, 2004. "Competition, complementarity and increasing disparities among the Regions of Spain and Portugal," Revue d'économie régionale et urbaine, Armand Colin, vol. 0(2), pages 311-330.
    12. Andrea Szalavetz, 2001. "Western policy lessons in the second phase of regional transformation," IWE Working Papers 119, Institute for World Economics - Centre for Economic and Regional Studies.
    13. Helm, Dieter, 2010. "Infrastructure and infrastructure finance: The role of the government and the private sector in the current world," EIB Papers 5/2010, European Investment Bank, Economics Department.
    14. Norbert Berthold & Michael Neumann, 2005. "Does Germany pay too much? What the New Economic Geography can teach German policy-makers in their the negotiations on the EU budget," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 58(10), pages 16-22, May.
    15. Sandy Dall'erba & Julie Le Gallo, 2003. "Geographic Spillover Effects of Regional Funds and their Impact on the European Convergence Process over 1989-1999," ERSA conference papers ersa03p136, European Regional Science Association.

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