ESPON 3.4.2
Territorial Impacts of EU Economic Policies and Location of
Economic Activities
ESPON 3.4.2: The Research Hypothesis
– knowledge and innovation based economy
– slow-growth cycle with low rates of growth of productivity and
demand
– economic activity is becoming more linked to specific
environments
– necessary context to enterprises looking for externalities
– fiscal and ideological restrictions
– public policy oriented towards indirect intervention through the
creation of externalities
– rising importance of the existing resources of regions
– remetropolitisation and reconcentration of economic activities,
– mainly into those areas already endowed with the necessary
framework conditions
Fundamentals 1: Profits of enterprises are at fairly high
levels
Fundamentals 2: Proportion of salaries in value added is
decreasing
Fundamentals 3: Investment of enterprises is decreasing:
Fundamentals 4: Different schools on regional growth
Theory
Main Source of Regional Growth
and Productivity
Export-base theories
productivity of a region’s tradable base
Endogenous (or ‘new’) growth
theory
accumulation and attraction of
educated and skilled human capital
Neo-Schumpeterian theory
innovation, technological advance and
entrepreneurialism
Cluster theories
clusters of specialised export-orientated
industries, and associated supporting
supplier and institutional networks
Evolutionary theory
adaptive capabilities of a regional
economy to respond to shifts and
changes in markets
well-developed and regionally
embedded set of informal and
informal institutions
cultural diversity and tolerance and
favourable cultural amenities and
infrastructure
Institutionalist theory
Cultural theory
What about the « New Economy » ?
–
Example: USA
–
no rise in technological residual of productivity growth through new
information technologies => no increase in global factor productivity
–
reorganisation of work processes increased productivity, not machines
–
strong demand for (expensive) investments in the new technologies
boosted growth
–
elements of spatial distribution:
–
proximity matters: increased complexity of rapidly evolving technologies
force actors to regroup and stay in contact
–
knowledge is often tacit and personal, making “transmission” costs rise with
distance
–
knowledge creation is cumulative in nature and thus there is a feedback
effect which strengthens those regions where knowledge and innovation is
already present
–
new economy also needs physical infrastructure investments (hot spots, fibre
optic connections, etc) which are only profitable in dense metropolitan areas
Hypotheses on regional effects of current
policies
– price stability as absolute priority reduces the adjustment
opportunities available in the past => immediate
competition, even for lagging regions with low
productivity
– globalisation and deregulation policies create competition
for jobs, thus exerting pressure on direct and indirect
wages and on working conditions
– lagging regions specialise in those economic sectors
where wage level important competition factor
– very limited redistribution of productivity gains towards
salaries => regressive specialisation
– increased difficulty for lagging regions to catch up
– but: empirical evidence concerning convergence is very
ambiguous
Regional policies
O r ie n t a t io n c h a n g e o f r e g io n a l p o lic ie s
F r o m th e 6 0 's
T o p -d o w n a p p ro a c h
E x o g e n o u s d e v e lo p m e n t
N a t io n a l r e g io n a l p o lic y
… u n t il t o d a y
B o tto m -u p a p p r o a c h
E n d o g e n o u s d e v e lo p m e n t
D e c e n t r a liz e d r e g io n a l p o lic y
E c o n o m ic c o n t e x t
* r is in g p h a s e o f a lo n g c y c le :
e x p lo it a t io n o f n e w t e c h n o lo g ic
o p p o r t u n it ie s
E c o n o m ic c o n t e x t
* d e c lin in g p h a s e o f a lo n g c y c le :
c h a n g e o f t e c h n o lo g ic a l d ir e c t io n
* h ig h g r o w t h
* c lim a x o f t h e W e lf a r e S t a t e
* in d u s t r ia l e c o n o m y
* lo w g r o w t h
* c r is is o f t h e W e lf a r e S t a t e
* k n o w le d g e e c o n o m y
C h a r a c t e r is t ic s
* K eynes
dem a nd econom y
s t a t ic c o m p e t it iv e n e s s
* f o r d is t
h o m o g en eo u s p r o d u c ts
w o r k d iv is io n
* f u n c t io n a lis t
t e c h n o c r a t ic m a n a g e m e n t
f u n c t io n s a r e s e p a r a b le
C h a r a c t e r is t ic s
* S c h u m p eter
s u p p ly e c o n o m y
R E S O U R C E S M O B IL IT Y
R e g io n a l p o lic y in s t r u m e n t s
* p u b lic a id
* in f r a s t r u c t u r e s
* C o n s u m p t io n s u p p o r t
R E S O U R C E S M O B IL IT Y
R e g io n a l p o lic y in s t r u m e n t s
* lo c a l f ir m c o m p e t it iv e n e s s
* lo c a l a c t o r s m o t iv a t io n
* t r a in in g , e d u c a t io n , R & D
C o n c e p t o f in te r -r e g io n a l e q u ity
C o n c e p t o f in te r -r e g io n a l e ffic ie n c y
d y n a m ic c o m p e titiv e n e s s
* t o y o t is t
d if f e r e n t ia t e d p r o d u c t s
f le x ib ilit y a n d p o ly v a le n c e
* t e r r it o r ia l
r e g io n s a r e m a n a g e m e n t a n d
in it ia t iv e u n it s
O r ig in s :

c r is is o f t r a d it io n a l s e c t o r s

c r is is o f t h e W e lf a r e S t a t e

in e f f ic ie n c y o f in v e s t m e n t s t im u la t io n
p o lic ie s

C o n c e r n f o r a m o r e a u t o n o m o u s r e g io n a l
d e v e lo p m e n t
E v o lu tio n o f r e g io n a l p o lic ie s
Our project
– Extensive review, analysis and synthesis of the literature
– Concentration on basic economic data, but in long-term
series (whenever possible)
– Sectoral structure
– Evolution of profits, wages, investments
– Basic information on production factors: human and
physical capital
– Localisation factors through entry-exit and enquiries
– Assessment of regional impacts of policies very
challenging
– Macro
– Regional
Some provocations
– Main questions for this workshop:
– Which are the main factors for knowledge society and economic
growth?
– How can we translate those factors for territorial analysis (both in
terms of territorial thinking and measuring)?
– Which recommendations can be given to future projects
approaching these questions?
– ESPON can not solve a decades-long discussion with oneyear under-financed projects
– Discussion has to focus on fundamentals to understand
regional development
– Every answer heavily depends on the scale
– Maybe ESPON should concentrate on the effort of
translating and synthesising wide range of existing
research into policy-relevant information