Regional Economics: Introduction to European Policies and International Cooperation

Objectives of Regional Economics Study

1Objectives . After a brief in-depth study on the definition of the regional economics and on the difficult relationship between economy and space, the logic with which the two conceptual frameworks of the regional economics are analyzed is presented. . Location theory is organized around the spatial structure of markets and the regulatory principles of activities in space. · Regional development/growth theories are grouped according to a twofold interpretative element:

• definition of space;
• conception of development/growth.

STUDIORON & UNIVERSITAS UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Contents of Regional Economics

2Contents

1. Economics and space
2. Location and physical-metric space
3. Regional growth and uniform-abstract space
4. Local development and diversified-relational space
5. Regional growth and diversified-stylized space
6. Towards a theoretical convergence: territorial foundations of macroeconomic growth models
7. Theories of convergence and divergence: a distinction by now superseded
8. The elements distinctive of theories: the structure of the book
9. Review questions

STUDIORDA UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Bibliographic References for Regional Economics

3Bibliographic references · Capello R,. Regional Economics, Routledge, 2nd Ed., 2015, Introduction REGIONAL ECONOMICS SECOND EDITION ROBERTA CAPELLO STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Economics and Space

41. Economics and space STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Definition of Regional Economics

51. Economics and space Regional economics . Regional economics is the branch of economics that incorporates the dimension 'space' into analysis of the workings of the market. It does so by including space in logical schemes, laws and models that regulate and interpret:

• the formation of prices,
• the formation of demand,
• the formation of productive capacity,
• levels of output,
• levels of development,
• growth rates and the distribution of income in conditions of unequal regional endowments of resources.

• Regional economics is not the study of the economy at the level of administrative regions. NAS STUDIOROM Sốc UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

From Space to Territory in Regional Economics

61. Economics and space Regional economics: from space to territory · Regional economics moves from 'space' to 'territory' as the main focus of analysis when local growth models include space:

• as an economic resource and as an independent production factor, a generator of static and dynamic advantages for the firms situated within it or
• as an element of fundamental importance in determining the competitiveness of a local production system.

STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Reasons for Delay in Considering Space in Economic Theory

71. Economics and space Reasons for the delay in considering space in economic theory . There are three main reasons for the delay in considering space in economic theory:

1. influence of the neoclassical school, according to it: «The difficulties of the problem depend chiefly on variations in the area of space, and the period of time over which the market in question extends; the influence of time being more fundamental than that of space» [Marshall Principles of Economics, 1920, 8th edition, vol. V, Chap. 15, section 1];
2. the treatment of the variable 'space' in economic analysis - especially if it is included in a dynamic approach - complicates the logical framework, requiring sophisticated analytical tools;
3. the introduction of the variable 'space' required the discarding of the simplifying hypotheses of constant returns and perfect competition, with the consideration of a logic of a system of monopolistic competition.

STUDIORON UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Fundamental Questions in Regional Economics

81. Economics and space Regional economics' fundamental questions · Regional economics therefore seeks to answer the following fundamental questions:

• What economic logic explains the location choices of firms and households in space?
• What economic logic explains the configuration of large territorial systems (e.g. city systems)?
• Why are certain areas - regions, cities, individual territories - more developed than others?

STUDIORUM & UNIVERSITAS UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Two Main Groups of Theories in Regional Economics

91. Economics and space Two large groups of theories that make up regional economics . Location theory -> the oldest branch of regional economics, first developed in the early 1900s, which deals with the economic mechanisms that distribute activities in space. · Regional growth (and development) theory - which focuses on spatial aspects of economic growth and the territorial distribution of income. STUDIORUM * UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Conception of Space in Regional Economics Theories

101. Economics and space Conception of space . Location theory -> Physical-metric space · Theories of regional growth -> Uniform-abstract space · Theories of local development -> Diversified-relational space · Theories of regional growth -> Diversified-stylized space STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Location and Physical-Metric Space

112. Location and physical-metric space STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Location Theory: Geographical Conception of Space

122. Location and physical-metric space Location theory / 1 . Location theory adopts a purely geographical conception of continuous, physical-metric space definable in terms of physical distance and transportation costs. · By removing any geographical (physical) feature, location choices are interpreted by considering only the great economic forces that drive location process. STUDIORON UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Location Theory: Explaining Activity Distribution

132. Location and physical-metric space Location theory / 2 . Location theory (used by the great geographers of the first half of the twentieth century) seeks to explain the distribution of activities in space, the aim being to identify:

• the location of individual activities/ the location choices of firms (Alfred Weber, Melvin Greenhut)
• the division of a spatial market (market areas) among producers (August Lösch, Harold Hotelling)
• the allocation of a physically territory (land) among alternative types of production, (Johann Heinrich von Thunen, William Alonso, 'New urban economics' School)
• the functional distribution of activity in space / the size of territorial agglomerations, their functional specialization and their territorial distribution (Walter Christaller, August Lösch)

STUDIOROM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Regional Growth and Uniform-Abstract Space

143. Regional growth and uniform-abstract space STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Theories of Regional Growth: Space Conception

153. Regional growth and uniform-abstract space Theories of regional growth / 1 · They used a conception of space - as uniform-abstract, no longer physical and continuous but abstract and discrete - entirely different from the physical-metric space of location theory. • Geographic space was divided into 'regions':

• areas of limited physical-geographical size
• considered to be internally uniform
• synthesizable into a vector of aggregate characteristics of a social-economic demographic nature

• They exclude any mechanism of interregional agglomeration and assume unequal endowments of resources and production factors, unequal demand conditions and interregional disparities in productive structures as the determinants of local development. STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Regional Growth Theories: Passive Role of Space

163. Regional growth and uniform-abstract space Theories of regional growth / 2 · Space is thus no more than the physical container of growth and performs a purely passive role in economic growth paths, while some macroeconomic theories reduce regional growth to the simple regional allocation of aggregate national growth. • Regional growth theories (second half of the 20th century) are concerned, in this case, with analysing, using macroeconomic models, the capacity of a sub-national system to develop economic activities, to attract them and to generate in loco the conditions for (more or less) lasting growth, generally measured mainly with a synthetic indicator of development such as income. . This conception of space has been adopted by:

• the neoclassical regional growth theory (neoclassical economics)
• the export-base theory (development economics)
• the interregional trade theory (economics of international trade)

STUDIORDA UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Local Development and Diversified-Relational Space

174. Local development and diversified-relational space STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Theories of Local Development: Economic Advantages

184. Local development and diversified-relational space Theories of local development / 2 · Diversified-relational space generates economic advantages through large-scale mechanisms of synergy and cumulative feedback operating at local level. 1960s · Development is «a selective, cumulative process which does not appear everywhere at the same time but becomes manifest at certain points [poles of development] in space with variable intensity>> [Perroux F. 1955] 1970s and onwards . The conceptual leap consisted in interpreting space as 'territory' (districts, local milieux'), or, in economic terms

• as a system of localized technological externalities which act upon the productivity and innovativeness of firms
• as a system of local governance that unites a community, a set of private actors and a set of local institutions
• as a system of economic and social relations constituting the relational or social capital of a particular geographical space

STUDIORON UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Local Development Theories: Endogenous Conditions and Micro-Approach

194. Local development and diversified-relational space Theories of local development / 2 . They stressed the role of endogenous conditions and factors in local development. . These theories adopted a micro-territorial and micro-behavioural approach; they can be called theories of development because their purpose was:

• to identify all the tangible and intangible elements of the growth process
• to explain the competitiveness of territorial systems

. They form the core of regional economics, the heart of a discipline where maximum cross-fertilization between location theory and development theory (especially through the consideration of 'agglomeration economies') permits analysis of regional development as generative development, as opposed to the competitive development. STUDIORON UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)