Urban and Regional Prosperity in a Globalised New Economy

Urban and Regional Prosperity in a Globalised New Economy

Edited by Roger Sugden, Rita Hartung Cheng and G. Richard Meadows

There is currently a popular view that the world is undergoing profound changes in the fundamental relationships upon which it is organised. In particular, there is widespread talk of a ‘globalised’ economy, facilitated by and associated with ‘new’ technologies and practices. There is a further consensus that within this ‘globalised’, ‘new’ economy, regionalisation in some form is important. The aim of this volume is to address these topical issues, presenting perspectives from which they can be analysed and exploring specific aspects in greater detail. The contributors provide a framework for understanding current trends, and suggest approaches that highlight appropriate ways forward in the context of both opportunities and dangers. In doing so, they discuss specific cases and explore detailed policy possibilities, including the prospect of stimulating change through multinational engagement and debate.

Chapter 4: Economic activity, market structure and public policy

Johan Willner

Subjects: urban and regional studies, regional studies, urban studies


Johan Willner* 1. INTRODUCTION This chapter deals with the relationship between important dimensions of social welfare and economic activity, when higher welfare for some groups means lower profits. I shall argue that the view that there is always a trade-off between, for example, enterprise formation and equality or job security is oversimplified. Consequently, there is at least some scope for an industrial policy that promotes economic activity without dismantling what is usually understood as the welfare state. High direct and indirect labour costs, regulation and a large public sector have often been blamed for lower growth and higher unemployment in Europe than in the US. For example, Stan Siebert argues in Chapter 5 in this volume that higher economic activity requires greater labour market flexibility, and that the so-called new economy reinforces the stark choice between wages and labour standards on the one hand and employment on the other. However, a brief overview of recent research and a model, which incorporates some important aspects of the debate, will suggest that this view is too simplistic. Many authors have emphasised access to credit as a barrier to entry, and this will be included in the formal analysis, which also deals with the impact of wages (and indirectly taxes) and job security. When a trade-off exists at all, it can be shifted, for example through the presence of public and/or cooperative ownership. This not only increases the number of competitors but also affects the behaviour of private firms. It will turn out...

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