roberto villarreal on regional development

8/4/2019 ROBERTO VILLARREAL on Regional Development

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Roberto Villarreal, Ph.D.

Presentation for Reflection and DiscussionInstitute of Electrical and Electronic Engineers (IEEE), New York Section

New York City, 27 July 2010



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◦

All responsibility for the contents of this presentation is solely theauthor’s, as these may not necessarily reflect the official positionof institutions where the author has collaborated or is presentlyassociated with.

◦ Head of the Units for Public Sector Investment, and Privatization (Ministry of Finance, FederalGovernment of Mexico, 1995-1997)

◦

Member of the Board in several parastatal enterprises and regulatory commissions of Mexico (oil andgas, electricity, railroads, airlines, water, rural development, technological research, etc., from 1995 to2007)

◦ Head of the Unit for Social and Regional Development (Office for Public Policies, in the Office of thePresident of Mexico, from 2002 to 2005)

◦ Undersecretary for Urban Development (Secretariat for Social Development, Federal Government of Mexico, 2006)

◦ Liaison of the Federal Executive with the Senate and the National Governors Association in Mexico , in a

task force to reform the National Planning Law to address regional development strategies (2006)◦ Head of the Division for Territorial Development at the Organization for Economic Cooperation and

Development (OECD, Directorate for Government and Territorial Development, 2008)

◦ Chief of the Branch for Development Management (United Nations, Department for Economic and SocialAffairs, Division for Public Administration and Development Management, 2009-2010).



Thanks for the kind invitation to make this presentation

◦ Institute of Electric and Electronic Engineers (IEEE), New YorkSection

◦ In particular, to Amitava Dutta-Roy, Ph.D., who contacted me and

was in charge of all communications and preparations

The objectives are to foster:

◦ An interdisciplinary analysis on regional development

◦ Some knowledge sharing and learning

◦ Perhaps, networking to strengthen an active community of practice on regional development management

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1. INTRODUCTION

2. WHY IS REGIONAL DEVELOPMENT IMPORTANT?

3. BASIC CONCEPTS ON REGIONAL DEVELOPMENT

4. A CLOSER LOOK AT INFRASTRUCTURE

5. ATTENTION TO PUBLIC GOVERNANCE

6. WHAT TO DO TO PROMOTE REGIONAL DEVELOPMENT?

7. FINAL REMARKS

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1.

INTRODUCTION






7. FINAL REMARKS



Development is a very complex process aimed atrising the living conditions of people

◦ Improving standards of life

Private goods and services: Food, housing, clothing, energy, transportation…

Public services: Education, healthcare, water, sanitation…

Public goods: Security, clean and safe environment…

◦ Enhancing freedoms and rights

Human rights: rights to life, physical integrity, self-determination, equalitybefore the Law, non-discrimination, transit, private property, justice…

Social rights: Education, health, decent work, social insurance andprotection…

Political rights: Freedoms of expression, association, petition before publicauthorities, vote and be voted in elections for public office, access to publicinformation…

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Development is gradual and can assume manydifferent styles

◦ Some basic attributes to be considered comprise:

Dynamism Inclusiveness

Equity

Sustainability

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Development is fostered by the people◦ Acting as individuals, or organized in many different forms to

pursue specific tasks

Community organizations, firms, corporations, labor organizations,

producers associations, consumers associations, schoolassociations, professional associations, sports clubs, other types of civil society organizations, political parties, etc.

◦ Success* depends on a variety of fundamental factors:

Skills and knowledge

Attitudes and values Organization and coordination

Rules, informal and formal institutions

Vision, creativity and leadership

7* Specifically, in their efforts to pursue development, both inexclusive (private) and non-exclusive (public) matters.



◦ One very important and particularly complex organization

among these is government Constituted to deal, on behalf of the people, with public affairs

Delivering determined public goods

Security, maintenance of the Rule of Law, justice, public health, monetary system,macroeconomic and financial stability, international relations, etc.

Securing, through public policies, an adequate provision, by both non-

government and government stakeholders, of goods and services of fundamental importance for development

Water, sanitation, healthcare, transportation, telecommunications, energy, scienceand technology research and development, etc.

Providing public administration on determined matters

Taxes, public budget, public finance, registrations, licenses, permits,concessions, public information, etc.

To these aims, people need to secure that effective conditions are permanently in place to maintain an effective and satisfactory people- government relationship Responsiveness, people-centered approaches to public administration and

development, transparency, accountability, efficiency, engagement of non-government actors in specific activities, etc.

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1. INTRODUCTION






7. FINAL REMARKS

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1. INTRODUCTION






7. FINAL REMARKS



HIGH INCOMESLOW GROWTH

II

HIGH INCOMEFAST GROWTH

IIII

IV LOW INCOMESLOW GROWTH

LOW INCOMEFAST GROWTH

* Territorial Level 2 (TL2, equivalent to Federal States in Mexico). The referenceaxes to distinguish the quadrants correspond to the average income level and theaverage growth rate among all TL2 OECD regions.

Federal States, Mexico.

Other TL2 OCDE regions.

Level of per capita income, log-values in 2005

E c o n o m i c g r o w

t h r a t e s , a n n u a l a v e r a

g e 1 9 9 5 - 2 0 0 5

LEVELS AND TRENDS OF PER CAPITA INCOME IN OECD REGIONS*,1995-2005

SOURCE:Villarreal and

Sanchez-Reaza,OECD (2008)



There are several reasons:

◦ Equity: to offer people in different regions opportunities toattain comparable living conditions

◦ Efficiency:

to facilitate the use of untapped resources in some regions to benefit from positive inter-regional externalities and reduce

negative ones Environmental, social, local public finance, market access, etc.

◦ Cohesion: to preserve unity and solidarity within regions in

a supra-regional coalition country level large inter-national regions globalization

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1. INTRODUCTION






7. FINAL REMARKS

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1. INTRODUCTION






7. FINAL REMARKS



A region is essentially constituted (and is to bedetermined) by 3 fundamental elements◦ Territory◦ Resources◦ Governance

◦ Regions and administrative-political demarcations need notgeographically coincide Sub-national

Metropolitan regions

Supra-national or international

◦ Approximating a region by the largest administrative-political demarcation in its territory may seem to makepractical sense in some cases, yet this approach risksoverlooking crucial aspects of resources and governancethat fundamentally affect its development

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Territory

◦ Topology Location

Bordering and farther away regions

Size

Integration Continuity

◦ Geography Surface and beneath features

Climate

Natural risks

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STATICFEATURES

DYNAMICFEATURES(opportunities

for publicpolicy

interventions)



Resources

◦ Natural Land Water Mineral Energy Ecosystems

◦ Human/social Population Skills and knowledge

Technologies

Culture and values Governance

◦ Economic Physical capital

Infrastructure

National or internationalsavings and finance

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……………………………… Wooden, agricultural, arid, etc.

……………………………… Salt, soft; underground, rivers, lakes, seas; rain, etc.

…………………………… Coal, hydrocarbons, gas, hydraulic, eolic, solar, etc.

……………………… Different supports for biodiversity

……………………… Size, age, sex, growth, migration, settlements, etc.

……… Education, training, learning attitudes, etc.

………………… Orientation to science, R&D, innovation, etc.

………… Beliefs, traditions, aspirations, historical experiences,social psychology, relationships, do’s and don´t’s,etc.

………………… Constructions, machinery and equipment forexclusive use.

………………… Constructions, machinery and equipment for non-exclusive use (in water and sanitation, transportation,telecommunications, energy, public health, publiceducation, public administration, security anddefense, etc.

Produced goods and services kept for future use byproducer or made available to others

……………… Each in many different types: Resources

◦ Natural Land Water Mineral Energy Ecosystems

◦ Human/social Population Skills and knowledge

Technologies

Culture and values Governance

◦ Economic Physical capital

Infrastructure

National or internationalsavings and finance

MOTHNMOLTO

OYNRAHRCOTYWA

(o

uteopcpcnevo

MOREINFO



1. INTRODUCTION






7. FINAL REMARKS

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1. INTRODUCTION






7. FINAL REMARKS



Infrastructure consists of diverse facilities to

perform support activities, which bundled, permitthe production and delivery of determined services extraction, collection, storage, processing, transportation and distribution of water, for agricultural,

industrial, urban or human uses

loading and unloading, fueling, dispatching, transit, monitoring and parking vehicles for land, rail,water or air transportation

extraction, transportation and processing of carbon, oil or gas as primary sources for the production of

energy, in the forms of heat or electricity

processing of primary energy from nuclear, wind or solar sources for generation of electricity

transportation and distribution of electricity

transmission and processing of signals to provide fixed or mobile telephony or internettelecommunications

collection, transportation, processing and treatment of solid or liquid residual materials of differentgrades of toxicity, as part of the maintenance of conditions of sanitation and public health

first, second and third level medical and para-medical interventions for healthcare

research, codification and dissemination of new knowledge, and education and training of professionals, for scientific and technological innovation

Etc.

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Infrastructure investments exhibit important specialcharacteristics

◦ Planning Long gestation lags

Technical complexity

Long useful life

◦ Finance High capital intensity

Capital costs constitute a large proportion of total unit service cost

(continues…)

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◦ Strong linkages of infrastructure to regional development

Non-moveable, their services circumscribed to determined technicaland economic efficiency geographical ratios

Rates of utilization and return largely dependent on (uncertain)local/regional demand

High income-elasticity (demand for these services growths proportionatelyfaster than local/regional income)

Unless installed capacity evolves closely with regional growth, lowutilization and return rates would be attained, or supply bottleneckswould be observed

As a result, as long as demand or market risk is considerable, capital costs are

relatively high and services prices tend to be also high

Given that infrastructure services are usually inputs to production ordistribution activities for all industries, as well as for final consumption, thesituation in which service prices are relatively high is very worrisome

It impacts negatively on regional competitiveness and wellbeing

(continues…) 19



◦ Infrastructure industries require regulation to address situations of potential abuse of market power*

SUPPLY SIDE: Production of services from infrastructure inmany cases exhibit considerable economies of scale Efficient production tends to be concentrated in few large

producers

Competition within determined geographical ratios is low

DEMAND SIDE: Services from infrastructure often have few andinefficient substitutes Low price elasticity: service demand lowers relatively slightly when

prices increase

Thus, production and demand features make it likely that

monopolistic pricing occurs Consequently, public regulation is needed to attain fair and efficient service

prices

This adds regulatory risk, and in turn rises capital costs and servicecosts, depending on the quality of regulation and predictability of itsenforcement

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* Of course, there are needs for other types of regulation stemmingfrom matters like public safety, service quality and consumer

protection. These are not discussed here to keep focused on the mostimportant matters for regional development.



1. INTRODUCTION






7. FINAL REMARKS

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1. INTRODUCTION






7. FINAL REMARKS



Public governance for development◦ consists in the set of informal or formal rules,

mechanisms, regulations, laws and institutions bywhich decisions are made by all stakeholders on

matters related with development affairs

◦ Thus, it is not circumscribed to decision making bygovernment or within the government sector

Rather, it encompasses overall decision making by allrelevant stakeholders

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Public governance may exhibit different features

over time and across regions◦ So, some forms of public governance may be in some cases

more or less conducive to development and affect itattributes Dynamism

Inclussiveness

Equity

Sustainability

◦ Among key elements of good or effective governance are thefollowing:

1. Laws and regulations which are adequate*, clear and effectivelyapplied

2. Well functioning legal and juridical system for the delivery of justice and the enforcement of contracts and property rights

(continues)

23*In the sense that they relate to existing culture and values, arerealistic in terms of compliance costs and enforcement, etc.



◦ Among key elements of good or effective governance are thefollowing (continued…)

3. Responsive, efficient, transparent, accountable andcoordinated* government

4. Sound public finance, with tax and public incomeproportionate to the efficient cost of public goods andservices that are required

5. Adequate and effective regulations on land use, and soundrules for transparent and efficient planning of infrastructure

6. People-public-private partnerships (PPPP)

7. Adequate and effective means for consultation, informationsharing and engaging of civil society and the private sector

in public decision making8. Stable economic and financial envirinment

9. Good financial markets (credit, capital, leasing, etc.)

10.Fair and effective ways for resolution of conflicts andcontroversies

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Multi-level governance1

◦ Government is usually organized in different levels (forinstance, national, state, local) and over differentdemarcations

Historically these tend to be constituted following notions of sovereignty, acquired rights, power, bounded autonomy,culture, etc.

This reflects in diverse constitutional arrangements which define the

roles for each government levels, their responsibilities and faculties

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Re-organizations of government at several levels take place onexceptional extraordinary cases, and sometimes political-administrative demarcations are simultaneously re-structured

Leading considerations come from regional development needs

Horizontal re-structuring (across entitities at every level of government)

Aimed at enhancing uniform and effective implementation anddelivery of public policies

Public expenditure and finance, public services, etc.

Examples

Metropolitan regions: Toronto, Ottawa, Milano, Paris, Mexico City,etc.

Inter-state regions: Canada, Mexico, etc.

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Vertical re-structuring (across levels of government)

Intended to distribute and combine responsibilities among the supra-national, national and sub-national levels in ways that best use of theircomparative advantages

leverage on law making and regulation

capacity to generate tax and public income

knowledge of specific development priorities and investmentneeds

capacity to make multi-stakeholder partnerships, etc.

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NATIONAL

LOCAL

Effective coordination implies collaboration and communicationwithin and across levels of government

to jointly support a shared vision of development, both horizontallyand vertically

Political factors (redistribution of power) may work in differentdirections and facilitate or hinder these changes




◦ Engagement of non-government actors (private sector, civil

society, international organizations, etc.) is important toenhance regional development strategies

To improve public information for decision making Needs and priorities

Proposals, initiatives, new ideas

To bring in additional resources for investment Public private partnerships

Strategic projects (infrastructure, science and technology research anddevelopment, social integration, etc.)

To constitute checks and balances on public sector decisions

and actions Monitoring, evaluation, social auditing

Reduce inefficiencies

To strengthen accountability

To extend and diversify ownership over strategies, thus

reducing opposition and favoring their continuityover time 28




◦ Engagement of non-government actors to be fully successfulrequires:

Presenting to everyone a positive net gain investment from their time

By design, regional development strategies should provide gains for adiverse community of stakeholders and not only to narrowly definedgroups

Fair and inclusive methods to attract participation To avoid corruption and capture of public strategies by interest groups

Preserving commitment, trust and continuing support

Accountability is fundamental, to effectively observe expected results

Transparency, including timely reporting and disclosure of impartialperformance, output and outcome evaluations

Efficient organization of the participation and engagement of thesenon-government stakeholders, as well as effective coordination withcorresponding government actors

Multi-lateral contracts (alliances, covenants, partnerships), councils orobservatories, online forms of e-participation, etc.

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1. INTRODUCTION






7. FINAL REMARKS

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1. INTRODUCTION






7. FINAL REMARKS



Macroeconomic policies are not enough to achievedynamic, inclusive, equitable and sustainable

development

◦ Monetary policy, trade liberalization, social protection, etc.

◦ Evidence from all countries shows that development andgrowth remain regionally uneven (and there is no convergence)

Need to complement coherently with other policies

◦ International experience shows that mechanical incometransfers or subsidies to lagging regions have majordisadvantages*

If operated on scales to significantly narrow inter-regional gaps,these policies are not sustainable over long periods of time

Constitute inefficient use of scarce fiscal and financial resources

Provide inadequate incentives to both lagging and progressingregions

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* Although politically, and election wise, may be attractive in somecircumstances for politicians.



◦ Rather, international attention is increasingly directed to otherkinds of public interventions at the regional level

Seeking to enhance in permanent manners competitiveness, incomegrowth, private investment, job creation and fiscal revenues

Most common public policies in this regard include:

A. policies to enhance local public goods (safety, law enforcement, publichealth, social cohesion, clean and safe natural environment, culture of innovation, public information dissemination, etc.)

B. policies to enhance governance

Effective government organization and coordination

Local government quality (responsiveness, efficiency, transparency,accountability, etc.)

Institutions, procedures, actions to facilitate cordination among non-government stakeholders and between these and government

Adequate local laws and regulations

C. policies to increase human capital

• Besides its local importance, it s portable and thus efficient under uncertainlocal conditions, and fair to people

(continues) 32



D. policies to provide sufficient, efficient annd quality servicesfrom infrastructure*

• Based on the analysis offered in Section 4 of this presentation,policies to this aim would look at:

1. Disseminating trustworthy information about likelyperspectives of development in the region, as to diminish

demand risk or uncertainty

• This may be achieved on the basis of:

• laws and regulations that result in credible planning in specificsectors

• public strategy making and delivering, supported by wide

consensus among relevant stakeholders

• Regional multi-stakehioilders councils, observatories,conferences, etc.

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* This is is evidently a different focus than expanding

local infrastructure or increasing investment



2. Having clear and sound criteria and policies regarding theroles of public and private investments in infrastructuresectors and projects

• Considering constitutional, legal and strategic frameworks

• Looking at the overall public investment budget and public debttrends

• Prioritizing public resources to regions with weaker regional

development perspectives, and within these prioritizing projectswith highest rates of socioeconomic return

• Looking at the feasibility of promoting private infrastructure orefficient public-private partnerships• Assessing public regulatory capacity

• Directing private resources to regions with stronger development

outlooks• Enforcing adequate public regulations, in ways that minimize

regulatory risk and corruption

• Promoting adequate finance in terms of sound contracts and funding

• Overall investment risks must be efficiently shared amonginvestors, owners and public authorities

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E. policies to maintain an open, inclusive andcompetitive economic and social environment

• Economic competition

• Transparent government

• Anti-corruption mechanisms

• Social inclusion programs

•

Political competition

F. Organized engagement of diverse non-government actors (private sector, civil society,international organizations)

Transparency and accountability Enhanced information for decision making

Innovation

Ownership of strategies, support and continuity

Better governance

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1. INTRODUCTION






7. FINAL REMARKS

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1. INTRODUCTION






7. FINAL REMARKS



Promoting regional development is important globally andfor countries to enhance the living conditions of thepeople◦ Creativity and leadership are called for

There are no scientifically researched proposals on how to

promote it◦ But there is significant activity and innovation going on at sub-

national, national and supra-national levels in different parts of the world

It would be extremely valuable to create a world repositoryof knowledge to be publicly available online, to facilitateinformation sharing on existing practices◦ Professionals in infrastructure sectors, regional development

management and public administration, as well as academicresearchers in these areas, can make numerous contributions,stemming from respective communities of practice

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CLASSES OFRESOURCES

STATIC DYNAMIC

IN THE PAST NOW IN THE FUTURE IN THE PAST NOW IN THE FUTURE

BOVILITYMinerals

Energy

Minerals

Energy

Water

Internationalsavings

Finance


Finance

Population

Knowledge

Technologies


Finance

Population

Knowledge

Technologies

Skills

NOMOBILITY

Land

Water

Minerals

Energy

Ecosystems

Land

Water

Ecosystems

LandEcosystems

Population

Skills

Knowledge

Technologies

Culture

Values

Governance

Physicalcapital

Infrastructure

Nationalsavings

Skills

Culture

ValuesGovernance

Physicalcapital

Infrastructure

Culture

Values

Governance

Physicalcapital

Infrastructure

roberto villarreal on regional development

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