Policy insights
Policy Insights
Policy Insight 128: The case for place-based policy
The case for place-based policy requires identifying and understanding the fundamental economic reasons for spatial disparities. If such disparities were just random self-correcting shocks, there would be little case for policy. This Policy Insight makes the case that spatial disparities arise and are persistent because of failures of economic adjustment that are inherent to the spatial context. They have negative implications for economic efficiency and for social equity, and therefore require a targeted policy response. Tony Venables sets out recent economic thinking about these failures and about the possibility that a region may become stuck in a ‘low-level spatial equilibrium’, and outlines the costs of such a trap.
