Lecture 7 Sedef Akgüngör Regional Economics Lecture 7 Sedef Akgüngör

THE ROLE OF GROWTH CENTERS Regional development assistance strategy concerns the focusing of such assistance upon a relatively small number of selected growth centers growth centers are then expected to attract commuters and migrants from surrounding areas of labor surplus

Migration to Growth Centers The growth-center strategy is sometimes presented as an alternative to migration from backward rural areas and small towns. Nevertheless, it would appear that migration does and should play an important role in a successful growth-center strategy.

Economic development regions were defined on the basis of 1. High unemployment 2. Low income 3. Low levels of "housing, health, and educational facilities" 4. Dominance of the regional economy by "only one or two industries, which are in a state of long-term decline" 5. Substantial out-migration of labor, capital, or both 6. Low growth rate of aggregate output 7. Adverse effects from changing industrial technology or changes in national defense facilities or production

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

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

http://ec.europa.eu/regional_policy/intro/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.asp http://www.regocentre.com/tci3.htm

Regional Policy Options Micro Policy Options Coordination Options Policies to Relocate Labor Policies to Relocate Capital Coordination between jurisdictions Coordination within jurisdictions Trade policy, fiscal policy, monetary policy Central control of macro policies

Micro Policies: Policies to Reallocate Labor Reallocation of labor through occupational training, education policies, intermediate labor market schemes. Spatial reallocation of labor. Migration policies (e.g. Subsidies to cover the pecuniary and psychic costs of migration) Mobility policies (e.g. İmproved flows of information to potential migrants, housing help for migrants, policies to ease house sales and purchase) Policies to improve the efficiency of labor markets

Micro Policies: Policies to Reallocate Capital Taxes and subsidies (inputs, output, technology) Policies to improve the efficiency of capital markets (e.g. Loan agreements, provision of venture capital, exchange guarantees, credit unions, local exchange and trade schemes, social risk capital) Administrative controls (e.g. On the location of private firms) Policies to develop social capital (capacity building)