Regional Regional EconomicsEconomics

Lecture 7Lecture 7

Sedef AkgüngörSedef Akgüngör

THE ROLE OF GROWTH THE ROLE OF GROWTH CENTERS CENTERS

RRegional development assistance egional development assistance strategy concerns the focusing of strategy concerns the focusing of such assistance upon a relatively such assistance upon a relatively small number of selected small number of selected growth growth centerscenters

growth centers are then expected to growth centers are then expected to attract commuters and migrants attract commuters and migrants from surrounding areas of labor from surrounding areas of labor surplus surplus

Migration to Growth Migration to Growth Centers Centers

The growth-center strategy is The growth-center strategy is sometimes presented as an alternative sometimes presented as an alternative to migration from backward rural to migration from backward rural areas and small towns.areas and small towns.

Nevertheless, it would appear that Nevertheless, it would appear that migration does and should play an migration does and should play an important role in a successful growth-important role in a successful growth-center strategy.center strategy.

Economic development Economic development regions were defined on the regions were defined on the

basis of basis of 1. High unemployment1. High unemployment 2. Low income2. Low income 3. Low levels of "housing, health, and 3. Low levels of "housing, health, and

educational facilities"educational facilities" 4. Dominance of the regional economy by 4. Dominance of the regional economy by

"only one or two industries, which are in a "only one or two industries, which are in a state of long-term decline"state of long-term decline"

5. Substantial out-migration of labor, capital, 5. Substantial out-migration of labor, capital, or bothor both

6. Low growth rate of aggregate output6. Low growth rate of aggregate output 7. Adverse effects from changing industrial 7. Adverse effects from changing industrial

technology or changes in national defense technology or changes in national defense facilities or productionfacilities or production

Working for the regionsWorking for the regions: : EUEU

European regional policy is a European regional policy is a policy promoting solidarity. It policy promoting solidarity. It allocates more than a third of the allocates more than a third of the budget of the European Union to budget of the European Union to the reduction of the gaps in the reduction of the gaps in Development among the regions Development among the regions and disparities among the and disparities among the citizens in terms of well-being. citizens in terms of well-being.

The Union seeks to use the policy to The Union seeks to use the policy to help lagging regions to catch up, help lagging regions to catch up, restructure declining industrial restructure declining industrial regions, diversify the economies of regions, diversify the economies of rural areas with declining agriculture rural areas with declining agriculture and revitalize declining neighborhoods and revitalize declining neighborhoods in the cities. It sets job creation as its in the cities. It sets job creation as its primary concern. In a word, it seeks to primary concern. In a word, it seeks to strengthen the economic, social and strengthen the economic, social and territorial ‘cohesion’ of the Union.territorial ‘cohesion’ of the Union.

http://ec.europa.eu/regional_policy/ihttp://ec.europa.eu/regional_policy/intro/working4_en.htmntro/working4_en.htm

“LEARNING REGIONS IN EUROPE: THEORY, POLICY AND PRACTICE THROUGH THE RIS

EXPERIENCE”.

One of the priorities for the new generation of regional development programmes in the European Union for the period 2000-2006 is the promotion of innovation. This is clearly stated in the official Commission Guidelines adopted in June 1999 as the basis for the negotiation of the new generation of regional programmes.

two broad principles: i) …identification of integrated strategies for development and conversion and ii) …the creation of decentralized, effective and broad partnership.

They state that “Structural assistance should therefore give an increasing priority to promoting RTD and innovation capacities in an integrated manner in all fields of intervention of the Funds” though actions such as:

i) Promoting innovation: new forms of financing (e.g. venture capital) to encourage start-ups, spin-outs/spin-offs, specialized business services, technology transfer,

ii) interactions between firms and higher education/research institutes,

iii) encourage small firms to carry out RTD for the first-time,

iv) networking and industrial co-operation, v) developing human capabilities.

http://www.lse.ac.uk/collections/EPER/vol3/no1/loewendahl.pdf

http://www.airi.or.kr/eng/intro/s2.ashttp://www.airi.or.kr/eng/intro/s2.aspp

http://www.regocentre.com/tci3.htmhttp://www.regocentre.com/tci3.htm

Regional Policy OptionsRegional Policy Options

Micro Policy Options

Coordination Options

Policies to Relocate Labor

Policies to Relocate Capital

Coordination within jurisdictions

Coordination between jurisdictions

Trade policy, fiscal policy, monetary policy

Central control of macro policies

Micro Policies: Policies to Micro Policies: Policies to Reallocate LaborReallocate Labor

Reallocation of labor through occupational Reallocation of labor through occupational training, education policies, intermediate training, education policies, intermediate labor market schemes.labor market schemes.

Spatial reallocation of labor.Spatial reallocation of labor. Migration policies (e.g. Subsidies to cover the Migration policies (e.g. Subsidies to cover the

pecuniary and psychic costs of migration)pecuniary and psychic costs of migration) Mobility policies (e.g. İmproved flows of Mobility policies (e.g. İmproved flows of

information to potential migrants, housing help information to potential migrants, housing help for migrants, policies to ease house sales and for migrants, policies to ease house sales and purchase)purchase)

Policies to improve the efficiency of labor Policies to improve the efficiency of labor marketsmarkets

Micro Policies: Policies to Micro Policies: Policies to Reallocate CapitalReallocate Capital

Taxes and subsidies (inputs, output, Taxes and subsidies (inputs, output, technology)technology)

Policies to improve the efficiency of capital Policies to improve the efficiency of capital markets (e.g. Loan agreements, provision of markets (e.g. Loan agreements, provision of venture capital, exchange guarantees, credit venture capital, exchange guarantees, credit unions, local exchange and trade schemes, unions, local exchange and trade schemes, social risk capital)social risk capital)

Administrative controls (e.g. On the location Administrative controls (e.g. On the location of private firms)of private firms)

Policies to develop social capital (capacity Policies to develop social capital (capacity building)building)