The starting point is that while macro-economic policy is important, there needs to be a place-based approach to economic development. The reasoning is summed up at length in the Barca Report, which says “In a place-based policy, public interventions rely on local knowledge and are verifiable and submitted to scrutiny, while linkages among places are taken into account.” In economic terms, the underlying idea is that the diversity of places means that top-down policy is acting on incomplete information, and thus is likely to compound market failure. However, in decentralizing there is also the risk that policy making is dominated by established elites and institutions that resist change. Thus higher tier authorities need to set a framework, “rules of the game” and incentives to stimulate action.
Message 1: Play to local strengths, assets and potentials
One size does not fit all. Policy makers need to understand just what their assets are. This covers economic assets, of course, but also other forms of capital. What are the local skills and education levels? What about environmental and cultural capital – how can assets there be best mobilised? The built environment is also a crucial resource, and will include essential services to support economic activity, e.g. hotels, commercial buildings, housing. Last but not least, what local institutions can support a planning for growth agenda and bring in other players?
Message 2: Build resilience as well as competitiveness
This is a theme I have covered in some previous blogs. It covers resilience in the face of environmental and technological hazards, but also the idea of economic resilience.
Message 3: Understand and exploit agglomeration economies
Spillovers of soft knowledge and sharing tacit understanding seem to be particularly important for innovation. Big cities have a real advantage here, and that seems to be a reason why they grow. Other places need to think about what they can do – e.g. through co-operation – to gain access to a wider pool of knowledge and contacts. EU transnational co-operation programmes like INTERREG or URBACT can be a way of sharing and growing new ideas. Co-operation with adjoining administrative areas can also build critical mass.
Message 4: Have an innovation dimension to your development strategy
This was the central theme of my previous blog. For more details click here.
Message 5: Think about clusters
There is a risk that clusters become seen as an off-the shelf solution, whereas in fact the evidence is that it is difficult for policy makers to create clusters. However, plans should be supportive of clusters that do exist or are forming.
Message 6: Improve access to networks and accessibility
Again this is a familiar theme, but it is important to remember that improved roads do not automatically trigger improved economic performance, and that the key issue for many other forms of infrastructure network is where you can gain access and who can get access. Fast trains that pass through a region but do not stop there can undermine relative competitiveness.
Message 7: Avoid urban sprawl
Sprawling, low density forms of development reduce resilience by increasing energy risk and car dependency. It also appears that permissive planning systems may have helped fuel construction booms that then collapsed, as in Ireland, Spain, Portugal and Greece. Corridor based development is close to a market-based outcome but can also support efficient public transport.
Message 8: Plan for functional regions and build mutually supportive urban-rural relations
It is a truism that activities of many kinds are not confined to administrative boundaries, yet much thinking in government (at all tiers) is shackled by just those boundaries. In particular, the functional areas of towns and cities encompass their hinterland in multiple sets of mutual dependencies, whether for work, waste disposal, water or tourism, to cite just a few examples. Whether or not formal regional bodies exist (and in several countries they do not) ways have to be found to intelligently relate action to these realities.
Message 9: Analyse the territorial impacts of policies and proposals
Though EIA and SEA are now established practices, and there are other forms of impact assessment that focus on gender or on impacts of policies on business, a place-based approach to development logically requires a capacity to impact a range of impacts (not just environmental) on places. Work being done in ESPON is seeking to develop “quick scan” techniques to help here.
Message 10: Public services matter
A hard distinction between public and private services understates the multiple ways in which effective public service provision can support a local economy. The ways in which public services can create economic opportunity should be embedded in a development strategy, and the development strategy should be embedded in the operation of those services.