Place-based approaches to regional development

The OECD has called the place-based approach to regional development “the new paradigm of regional policy”. Economically, the idea is rooted in the concepts of market failures and government failures that create inefficiency and social exclusion. Institutions are central to these failures, and there is a risk that past failures compound future problems. The economic theory in the report is not an easy read, but the basic point is that institutions tailored to the needs of places are of critical importance for regional development.

Public bodies such as local government are prominent amongst such institutions, but the idea of an “institution” also encompasses things like legislation, practices, shared outlooks and other “soft” factors that shape how organizations work. Linkages with other places also shape the success or failure of place-based initiatives. Behind this rather complicated language there is an endorsement of the essence of the approach that the IC has adopted: support entrepreneurship and innovation, reach out to groups that are often marginalized (like young people) and build your networks. The theory is also strong on the need for transparency and evaluation of public interventions and giving everyone the opportunity to have the information, participate and voice dissent.

Another key idea is the importance of inter-linkage between different tiers of government. Trust, as well as contracts, is important, and agencies such as public-private partnerships have a key role. However, a fundamental part of a place-based approach is that it allows responses to be tailored to local conditions, rather than imposed uniformly from top-down.

Cohesion Policy

Barca rejects the idea that financial redistribution amongst Member States and Regions should be the reason for cohesion policy. This also means that the current system in which richer countries pay more into the EU budget, but then get some of this money back through cohesion policy to spend on their regions, though subject to rules and conditions, is inherently inefficient. However, this does not mean that rich regions should get no cohesion money. All regions have challenges to overcome, and furthermore, Barca argues, all EU citizens should be able to see that the Union is helping them cope with the risks associated woth economic change.

Barca also rejects the notion that some kind of convergence in terms of average per capital income between regions can be equated with social inclusion. There are simply too many other factors that are involved. He also says that place-based policies should not be seen as a restriction on migration: people have the choice whether or not to move.

Most EU policies take no account of their spatial impacts. Such “spatially blind” approaches are inefficient and inequitable, the report suggests. However, cohesion policy also needs to change. Amongst his criticisms are a lack of focus on strategic planning and priorities, and a failure to distinguish between efficiency and inclusion objectives. The recommendations address these weaknesses.

Among the recommendations are that here should be much more concentration of resources on addressing just 3 or 4 core priorities. Barca suggests that innovation and migration might be amongst these. Four percent of the funds would be allocated to “territorial co-operation”. These would largely follow present guidelines but support the core cohesion priorities.

The report is almost 200 pages long. It is not a quick read, but the issues it covers are important to networks like the IC. When the future of cohesion policy is negotiated, the issues raised in the report should be addressed.