Description
This paper looks at recent theoretical developments in regional economics and investigates their implications for regional policy making. The paper starts from a standard neoclassical view of regional economic development and argues that although the neoclassical model provides long term guidance for regional economic policy, it is inconsistent with on the one hand the premises of regional economic policy and on the other hand with fundamental empirical evidence.It is argued that the assumptions of neoclassical theory need to be relaxed or modified in order to overcome these conceptual problems. Recent theoretical developments like New Economic Geography and others apply such modifications and therefore lead to a much more realistic understanding of regional economic development. By introducing economies of scale, agglomeration economies or other positive externalities into the economic system they lead to a more realistic view of regional economic development and also provide a conceptual basis for regional economic policy. Since the economic system does not automatically converge toward a Pareto-optimal equilibrium under these assumptions, regional economic policy is needed in order to guide and steer the system. It is argued that many modern approaches to regional policy like cluster policy, innovation policy, regional marketing, etc. actually rely on this modern understanding of regional economic development. Although modern views of regional economic development provide an argument for policy, they lack the neoclassical model's ability to provide long term guidance for policy. As is argued in the paper, because of their more realistic assumptions the new models accumulate and magnify random influences, allow for multiple equilibria and switching development paths.| Period | 18 Nov 2010 → 19 Nov 2010 |
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| Event title | Spatial Economy for Society |
| Event type | Unknown |
| Degree of Recognition | International |