Bulletin n. 2/2007
October 2007
CONTENTS
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
    • Ulltveit-Moe Karen Helene
    Regional policy design: An analysis of relocation, efficiency and equity
    in European Economic Review , Volume 51, Issue 6, August 2007 ,  2007
    Despite substantial regional expenditure at both national and community level, European regional policies do not appear to deliver. Evidence suggests that neither efficiency gains nor reduced regional inequalities result. If there is any positive impact at all, then it is at most a redistributional one. If transfers are mainly redistributional in nature, would policies based on non-distortionary financing be a better route to follow? We consider the alternatives to a distortionary regional policy that forces the delocation of activities. Are non-distortionary policies always relatively more efficient than distortionary ones? We analyse these questions employing a new economic geography model, which also takes into account the importance of knowledge spillovers for productivity, industry location and policy. We show that the effectiveness of different regional policies depends on (i) intra-industry knowledge spillovers, (ii) inter-industry knowledge spillovers and (iii) trade costs. Our analysis suggests that the European approach to the elimination of regional inequalities may, relatively, be the more costly alternative.
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