Handbook of Regional Growth and Development Theories
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Handbook of Regional Growth and Development Theories

Edited by Roberta Capello and Peter Nijkamp

Regional economics – an established discipline for several decades – has gone through a rapid pace of change in the past decade and several new perspectives have emerged. At the same time the methodology has shown surprising development. This volume brings together contributions looking at new pathways in regional economics, written by many well-known international scholars. The most advanced theories, measurement methods and policy issues in regional growth are given in-depth treatment.
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Chapter 23: Regional Policy: Rationale, Foundations and Measurement of its Effects

Jouke van Dijk, Henk Folmer and Jan Oosterhaven


23 Regional policy: rationale, foundations and measurement of its effects Jouke van Dijk, Henk Folmer and Jan Oosterhaven 23.1 Introduction Since the 1930s generations of policy-makers have developed and implemented regional policies for both economic (efficiency) and social (equity) reasons. As regards efficiency, regional disparities in, for instance, unemployment and per capita income often have negative effects on the efficient operation of the national and regional economy. Armstrong and Taylor (2000) give several arguments. The whole nation is better off when unemployed in regions with high unemployment become employed, if the possible loss of jobs in other regions is smaller. A redistribution of jobs may lower the number of hard to fill vacancies in regions with low levels of unemployment. Other benefits are an increase in gross domestic product (GDP) at the national and regional level, and lower costs of social security. A more equal spread of economic activities may also reduce the negative cost of congestion, such as traffic jams and environmental damage in the more densely populated regions of a country. Finally, smaller regional differences in unemployment may also reduce inflationary pressure. As regards equity, reducing interregional disparities may contribute to the general objective of reducing all kinds of unwanted inequality between individuals. In this respect, two classical dilemmas (Stilwell, 1972) are still relevant. First, there is the dilemma of ‘place prosperity versus people prosperity’. At first instance, a direct targeting of individual inequities by means of, for instance,...

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