Regional Development Theories and Their Application

Benjamin Higgins

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351494106
• Edition: 1
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

Throughout the world today former nation-states, as disparate as Yugoslavia, Somalia, and Canada, have either disintegrated or threaten to splinter into regions. The conflicts are economic, social, ethnic, linguistic, religious, political, and cultural. Higgins and Savoie analyze the reasons for these conflicts and show why attempts to eliminate regional disparities within nations have been largely unsuccessful. This volume is a highly readable, comprehensive survey of the literature and current debates in the fields of regional economics, development, policy, and planning.

Part I

Theory

1

Introduction

This book has three objectives: to provide a readable, readily comprehensible survey of the literature and current discussion in the fields of regional economics, regional development, regional policy and planning; to lay the foundations for improved economic and social policy, formulated and implemented at the regional or community level; and to demonstrate that the social sciences, and particularly economics, can be more effective instruments for discovery of truth and acquisition of new knowledge, and thus for solution of current economic and social problems, if major emphasis is laid on analysis at the regional and community level, rather than putting the emphasis exclusively on analysis at the national (macro) level and at the (micro) level of the industry, enterprise (firm), household and local government.

It is our contention that societies and economies cannot be well understood without analyzing the multi-faceted interactions, feedbacks, and overlaps among spaces, structures, and societies. “Countries,” nations, nation-states, and national economies are in fact collections of spaces (regions), each with its own society and its own economic, social, political and power structure. The degree to which these spaces are integrated into a unified national economic, social, political and administrative system varies a great deal from country to country, and these variations go a long way in explaining differences in performance (economic, social, and political) from country to country. Where performance is unsatisfactory, more often than not, intervention is required at the regional and community level, and not just at the macro or micro levels. In other words, regional analysis is not a “branch” of, or field apart from, other social sciences; rather, it is an integral and integrating component, a catalyst, a synapse, for the social sciences as a whole.

In the past, the separate disciplines comprising the social sciences have tended to view “regional analysis” in different ways. Anthropologists, by and large, did not think of themselves as conducting “regional analysis,” although the societies they studied necessarily occupied particular spaces, and were influenced by the physical environment. In recent years, however, as anthropologists were more and more frequently included on regional development planning teams, the profession became more aware of the contribution it can make to analysis and policy defined in regional terms. Sociologists, naturally enough, have been interested in differences in social structures from region to region, and in the causes and effects of these differences. They have shown concern regarding regional disparities. Political scientists conducting regional analysis have tended to concentrate on such matters as relationships among governments at federal, state or provincial, and local levels, revenue sharing, distribution of taxing and spending powers among levels of government, and problems of public administration arising from regional disparities and efforts to reduce them.

When urban and regional economics began to develop as a separate field in the 1950s and 1960s, most economists entering that field thought of it as a distinct branch of their discipline. As regional development planning became a more and more important aspect of the international development effort, in the late 1960s and early 1970s, and as regional disparities became a matter of growing concern in many industrialized countries as well, urban and regional economists began to see that their field was in fact a vital part of the economics discipline as a whole. Except for the greater emphasis on the physical environment, geographers, and especially economic geographers, have applied to regional problems a methodology barely distinguishable from that followed by urban and regional economists.

The degree to which recognition of the integrating function of regional analysis requires changes in the methodology of particular social sciences varies from branch to branch. Anthropology is based on on-the-spot study of particular societies, which regional analysis also entails. However, as a rule, the anthropologist does not devote detailed attention to analysis of the physical environment with which the society of a particular space interacts, let alone making recommendations for changing that environment so as to improve the society. Comparisons of one society with another are too seldom made, and generalizations leading to policy conclusions even more seldom. Geographers, on the other hand, while making major contributions to regional analysis, tend to err in the other direction; they are keenly aware of the physical environment but underemphasize the social and cultural structure, including the political framework and administrative problems. Sociologists today, when they enter into regional analysis, usually do so in a comprehensive fashion, but seldom include in their analysis such purely economic factors as market structures, distribution of monopoly power, impact of monetary, fiscal, and foreign trade policy. Political scientists also tend to pay little attention to these factors, and to socio-cultural factors.

There is need for some degree of division of labour among the social sciences; but regional analysis, if it is to be effective, cannot afford to leave out anything of importance. By definition, regional analysis must adopt a multi-disciplinary approach, which is why it is uniquely placed to play a major role in weaving together the various strands of the social sciences into an elegant but strong fabric.

Scope: Space as a Strategic Variable in Socio-Economic Analysis

Mainstream economics has traditionally considered space in four ways:

1. Although much of mainstream (neo-classical) economics explicitly or implicitly assumes that space is homogeneous, and therefore abstracts from spatial considerations altogether, when working at a level closer to reality, mainstream economists do recognize that different spaces have different resource endowments, physical and human. These differences create opportunities for geographic specialization, according to comparative advantage. Recognition of the existence of these opportunities gives rise to the theory of interregional and international trade.
2. Similarly, while much of mainstream economics abstracts from transport costs and assumes, implicitly or explicitly, completely costless and instantaneous mobility of all factors of production, at a higher level of reality it is recognized that the different resource endowments of different regions, which provide a basis for interregional trade, also entail the existence of distances between spaces. Transport costs and limited mobility must therefore be taken into account in any analysis that purports to be realistic enough to provide a basis for policy recommendations. Nonetheless, much neo-classical analysis treats transport costs and immobilities essentially as nuisances that detract from the elegance of the analysis, and neither is the subject of thorough analysis in most of the mainstream literature.
3. Since neither people nor resources are spread evenly through space, there are necessary choices and decisions to be made as to what economic activities should be carried out where. Proximity to markets (people) and to resources, production costs, and transport costs will be considerations in these decisions. More recently, access to information and to innovations have been added to the list of considerations. The aggregation of these decisions will determine the location of industry and other economic activities, and thus the location of population, the location and size of cities, the urban hierarchy. These very complex interactions gave rise to the theory of location, which became one of the most abstract, one of the most abstruse, and one of the least satisfactory branches of neo-classical economics.
4. The boundaries of political units are defined in space: nation-states, states and provinces, municipalities, districts. These units have varying degrees of power in various fields of policy: monetary, fiscal, trade, foreign exchange, wage-price regulation, land use, and so on. Thus in the analysis of public policy, neo-classical mainstream economics was obliged to recognize the existence of differentiated spaces. As a rule, however, it did not take account of specific social, cultural, or political differences among these spaces.

It is fair to say, however, that mainstream economics, whether neo-classical or Marxist, or even Institutionalist, never dealt adequately with space as such. It is one of the principal aims of this book to fill this gap, at least in part. We shall argue that the failure of neo-classical economics to deal adequately with space springs largely from three fundamental tenets, seldom explicitly stated, and even less frequently defended:

1. The free market actually works in such a way as to bring an optimal allocation of resources, to bring rapid, painless, and essentially costless adjustment to change, and to assure an acceptable distribution of income.
2. There is a basic harmony of interests among social groups, communities, regions, and nation-states.
3. In the absence of misguided government interference, the degree of actual mobility in the real world would be such that the assumption of complete, costless and instantaneous mobility would do no great violence to reality.

With these assumptions or beliefs, regional analysis becomes simply uninteresting. A free market with sensible monetary and fiscal policy to maximize the level and rate of growth of national income would maximize the welfare of all social groups, regions, and countries. Regional disparities could not persist. If yields per man/hour in growing rice in Texas were several times as high as in India (as they are), Indian rice-growers would move to Texas until productivity was equalized in the two regions. Differences in productivity and incomes among sectors would also tend to disappear, as they have done to a considerable degree in Australia. The overlap between disadvantaged sectors and disadvantaged regions, so evident in developing countries and present in industrialized ones as well, could not persist. Indeed, “regions” would have little meaning. They would be artificial subdivisions of national economies, and any intervention in the market in the name of regional policy would be at the cost of a reduction of efficiency in those national economies. Implicit or explicit in the standard neo-classical analysis is a “natural” tendency of unhampered economies toward equilibrium, and to return to equilibrium if disturbed. In the extreme version, this “equilibrium” is even one with full employment and stable price levels. In other versions (Milton Friedman) “full” becomes “natural,” the amount of unemployment consistent with stable prices, or a stable rate of inflation.

On the whole, Marxists have paid little more attention to space than the neo-classical economists. When they do, it is usually in the guise of some variant of the “dependency theory,” with space in the form of a “centre” where the international monopoly capitalists have their headquarters, and a “periphery” in the form of regions or countries where abide the people they systematically exploit. In this theory, interregional or international disparities persist because the capitalists, who have the power, want them to persist, to keep wages down and profits up. Thus regions or spaces are defined in terms of the interregional and international power structure, and the distribution of income that results from it.

It is our contention that the real world is very different from the pictures painted by either the neo-classical or Marxist schools, and that space plays a far more vital role in economies and societies than either school allows. Among the factors which lead us to this view, to be elaborated below, are the following:

1. All societies live in particular places; cultures are defined in terms of space. This simple fact has been recognized by other social scientists, but seldom explicitly by economists.
2. These spaces are almost always smaller geographically than a nation-state. There is hardly any country, with the possible exception of some of the smallest island nations, which is so homogeneous as to be regarded as a single society or culture.
3. In most countries, there are sharply differing or even conflicting interests among various societies occupying various spaces within them. Most apparent are cases like Tamils in Sri Lanka, Sikhs in India, Basques in Spain, Welsh and Scotch in the United Kingdom, Québécois and Acadiens in Canada, Indians in Mexico. But there are more subtle conflicts among societies/spaces in almost every country in the world. In Canada, for example, there is scarcely a region or province that does not have its own cultural and social characteristics and its own special interests, which are often in conflict with those of other provinces and regions.
4. Economic and social interests of particular societies in particular spaces are closely tied to the dominance of particular sectors of economic activity and the consequent structure of the economy and society. A commonality of interests arises only when people live and make their living in the same sector and in the some place. Sugar cane growers and cutters in Fiji, for example, are not much interested in promoting the welfare of sugar cane growers and cutters in nearby Queensland. People seldom develop loyalties to sectors.
5. People do, however, develop strong loyalties and attachments to spaces. Family, friends, institutions, landscapes, climates, a general sense of belonging and of knowing how to behave in a particular society,—these exercise a very strong pull on most normal people. And this pull means that mobility could never be costless, instantaneous, and painless even if transport were free, and if houses, churches, hospitals, schools, power plants, etc. could be transported, instantaneously and costlessly along with the people. Many people hav...

Table of contents

• Cover Page
• Regional Development Theories & Their Application
• copy
• Contents
• Preface
• Part I: Theory
• Part II: Policy, Planning, and Programs
• Part III: Looking Back—Looking Ahead
• Name Index
• Subject Index