roberto villarreal, ph.d. presentation for reflection and discussion institute of electrical and...

ON THE PROMOTION OF

REGIONAL DEVELOPMENT

Roberto Villarreal, Ph.D.Presentation for Reflection and Discussion

Institute of Electrical and Electronic Engineers (IEEE), New York Section

New York City, 27 July 2010

CAVEAT

2

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

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

◦ Member of the Board in several parastatal enterprises and regulatory commissions of Mexico (oil and gas, electricity, railroads, airlines, water, rural development, technological research, etc., from 1995 to 2007)

◦ Head of the Unit for Social and Regional Development (Office for Public Policies, in the Office of the President 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 Social Affairs, 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 York Section

◦ 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

3

INTRODUCTORY REMARKS

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

OUTLINE

4

1. INTRODUCTION






7. FINAL REMARKS

Development is a very complex process aimed at rising 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, equality

before the Law, non-discrimination, transit, private property, justice… Social rights: Education, health, decent work, social insurance and

protection… Political rights: Freedoms of expression, association, petition before public

authorities, vote and be voted in elections for public office, access to public information…

5

1. INTRODUCTION1

Development is gradual and can assume many different styles

◦ Some basic attributes to be considered comprise:

Dynamism Inclusiveness Equity Sustainability

6

1. INTRODUCTION2

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, school associations, 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

1. INTRODUCTION3

* Specifically, in their efforts to pursue development, both in exclusive (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,

science and 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.

8

1. INTRODUCTION4

1. INTRODUCTION






7. FINAL REMARKS

OUTLINE

9

1. INTRODUCTION






7. FINAL REMARKS

10

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 reference axes to distinguish the quadrants correspond to the average income level and the average growth rate among all TL2 OECD regions.

Federal States, Mexico.

Other TL2 OCDE regions.

Level of per capita income, log-values in 2005

Eco

nom

ic g

row

th r

ate

s, a

nnual avera

ge 1

99

5-2

00

5

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

2. WHY IS REGIONAL DEVELOPMENT IMPORTANT?1

SOURCE: Villarreal and Sanchez-Reaza, OECD (2008)

There are several reasons:

◦ Equity: to offer people in different regions opportunities to attain 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

11

2. WHY IS REGIONAL DEVELOPMENT IMPORTANT?2

1. INTRODUCTION






7. FINAL REMARKS

OUTLINE

12

1. INTRODUCTION






7. FINAL REMARKS

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

◦ Regions and administrative-political demarcations need not geographically coincide Sub-national

Metropolitan regions Supra-national or international

◦ Approximating a region by the largest administrative-political demarcation in its territory may seem to make practical sense in some cases, yet this approach risks overlooking crucial aspects of resources and governance that fundamentally affect its development

13

3. BASIC CONCEPTS ON REGIONAL DEVELOPMENT1

Territory

◦ Topology Location Bordering and farther away regions Size Integration

Continuity

◦ Geography Surface and beneath features Climate Natural risks

14

STATIC FEATURE

S

DYNAMIC

FEATURES

(opportunities for public

policy 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 international savings and finance

15

……………………………… 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 for exclusive use.

………………… Constructions, machinery and equipment for non- exclusive use (in water and sanitation,

transportation, telecommunications, energy, public health, public education, public administration, security and

defense, etc. Produced goods and services kept for future use by producer 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 international savings and finance

MO

ST H

AV

E N

O M

OB

ILIT

Y,

OR

ON

LY IN

R

ATH

ER

C

OS

TLY

W

AY

S (

op

port

un

itie

s f

or

pu

blic p

olicy in

terv

en

tion

s)

MORE INFO


1. INTRODUCTION






7. FINAL REMARKS

OUTLINE

16

1. INTRODUCTION






7. FINAL REMARKS

Infrastructure consists of diverse facilities to perform support activities, which bundled, permit the 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 internet

telecommunications collection, transportation, processing and treatment of solid or liquid residual materials of different

grades 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.

17

4. A CLOSER LOOK AT INFRASTRUCTURE1

Infrastructure investments exhibit important special characteristics

◦ 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…)

18


◦ Strong linkages of infrastructure to regional development

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

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

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

Unless installed capacity evolves closely with regional growth, low utilization and return rates would be attained, or supply bottlenecks would 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 or distribution activities for all industries, as well as for final consumption, the situation 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 in many 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 and inefficient 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 service

costs, depending on the quality of regulation and predictability of its enforcement

20

* Of course, there are needs for other types of regulation stemming from matters like public safety, service quality and consumer protection. These are not discussed here to keep focused on the most important matters for regional development.



Infrastructure services are crucial for wellbeing and competitiveness◦ For consumers:

These services are essential for them to exert many of their human capabilities Supply shortages or quality defects have deep real negative impacts

Also, expenditure on these services represents a significant share in their total consumption budget Economic effects on purchasing power, consumption levels and wellbeing are very large

◦ For producers: Many of these services constitute intermediate inputs of production for practically

all productive activities (primary, secondary and tertiary sectors) Supply bottlenecks constrain aggregate output and limit employment

In addition, outlays on purchases of these services add to a considerable proportion in total and unit costs of production Relative high unit costs decrease competitiveness, limit access to markets outside the region

or internationally, reduce growth and diminish job creation

◦ Therefore, unless adequate and timely actions are taken to efficiently promote investment in infrastructure sectors and adequately regulate them, regional development is severely hampered

1. INTRODUCTION






7. FINAL REMARKS

OUTLINE

22

1. INTRODUCTION






7. FINAL REMARKS

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

mechanisms, regulations, laws and institutions by which decisions are made by all stakeholders on matters related with development affairs

◦ Thus, it is not circumscribed to decision making by government or within the government sector Rather, it encompasses overall decision making by

all relevant stakeholders

23

5. ATTENTION TO PUBLIC GOVERNANCE1

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 it attributes Dynamism Inclussiveness Equity Sustainability

◦ Among key elements of good or effective governance are the following:1. Laws and regulations which are adequate*, clear and

effectively applied2. Well functioning legal and juridical system for the delivery of

justice and the enforcement of contracts and property rights

(continues)

24


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

◦ Among key elements of good or effective governance are the following (continued…)3. Responsive, efficient, transparent, accountable and

coordinated* government4. Sound public finance, with tax and public income

proportionate to the efficient cost of public goods and services that are required

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

6. People-public-private partnerships (PPPP)7. Adequate and effective means for consultation,

information sharing and engaging of civil society and the private sector in public decision making

8. Stable economic and financial envirinment9. Good financial markets (credit, capital, leasing, etc.)10.Fair and effective ways for resolution of conflicts and

controversies25


Multi-level governance1

◦ Government is usually organized in different levels (for instance, national, state, local) and over different demarcations

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

26



Re-organizations of government at several levels take place on exceptional 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 and delivery 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.

27



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 their comparative advantages

leverage on law making and regulation capacity to generate tax and public income knowledge of specific development priorities and investment

needs capacity to make multi-stakeholder partnerships, etc.

28


NATIONAL

LOCAL

Effective coordination implies collaboration and communication within and across levels of government to jointly support a shared vision of development, both horizontally

and vertically Political factors (redistribution of power) may work in different

directions and facilitate or hinder these changes


◦ Engagement of non-government actors (private sector, civil society, international organizations, etc.) is important to enhance 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 and

development, 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

continuity over time 29



◦ Engagement of non-government actors to be fully successful requires: Presenting to everyone a positive net gain investment from their

time By design, regional development strategies should provide gains for a

diverse community of stakeholders and not only to narrowly defined groups

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 impartial

performance, output and outcome evaluations Efficient organization of the participation and engagement of these

non-government stakeholders, as well as effective coordination with corresponding government actors Multi-lateral contracts (alliances, covenants, partnerships), councils or

observatories, online forms of e-participation, etc.30


1. INTRODUCTION






7. FINAL REMARKS

OUTLINE

31

1. INTRODUCTION






7. FINAL REMARKS

Macroeconomic policies are not enough to achieve dynamic, inclusive, equitable and sustainable development

◦ Monetary policy, trade liberalization, social protection, etc.◦ Evidence from all countries shows that development and

growth remain regionally uneven (and there is no convergence)

Need to complement coherently with other policies

◦ International experience shows that mechanical income transfers or subsidies to lagging regions have major disadvantages* 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 progressing

regions

32

6. WHAT TO DO TO PROMOTE REGIONAL DEVELOPMENT?1

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

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

Seeking to enhance in permanent manners competitiveness, income growth, 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, public

health, 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 uncertain

local conditions, and fair to people

(continues)33

6. WHAT TO DO TO PROMOTE REGIONAL DEVELOPMENT2

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

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

1. Disseminating trustworthy information about likely perspectives 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 specific

sectors• public strategy making and delivering, supported by wide

consensus among relevant stakeholders• Regional multi-stakehioilders councils, observatories,

conferences, etc.

34


* This is is evidently a different focus than expanding local infrastructure or increasing investment

2. Having clear and sound criteria and policies regarding the roles of public and private investments in infrastructure sectors and projects

• Considering constitutional, legal and strategic frameworks• Looking at the overall public investment budget and public

debt trends• Prioritizing public resources to regions with weaker regional

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

• Looking at the feasibility of promoting private infrastructure or efficient 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 among investors, owners and public authorities

35


E. policies to maintain an open, inclusive and competitive 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

36


1. INTRODUCTION






7. FINAL REMARKS

OUTLINE

37

1. INTRODUCTION






7. FINAL REMARKS

Promoting regional development is important globally and for countries to enhance the living conditions of the people◦ 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 repository of knowledge to be publicly available online, to facilitate information sharing on existing practices◦ Professionals in infrastructure sectors, regional development

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

38

7. FINAL REMARKS

39

ANNEX

CLASSES OF

RESOURCES

STATIC DYNAMIC

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

FUTURE

BOVILITYMinerals

Energy

Minerals

Energy

Water

International savings

Finance


Finance

Population

Knowledge

Technologies


Finance

Population

Knowledge

Technologies

Skills

NO MOBILITY

Land

Water

Minerals

Energy

Ecosystems

Land

Water

Ecosystems

Land

Ecosystems

Population

Skills

Knowledge

Technologies

Culture

Values

Governance

Physical capital

Infrastructure

National savings

Skills

Culture

Values

Governance

Physical capital

Infrastructure

Culture

Values

Governance

Physical capital

Infrastructure

40

OBSERVABLE TRENDS IN THE INTERNATIONAL MOVILITY OF RESOURCES

BACK TO PRESENTATION

roberto villarreal, ph.d. presentation for reflection and discussion institute of electrical and...

Documents

social development

territorial development

regional development

regional development

development oecd

rural development

urban development secretariat

public governance