Regional Disparities, Growth, and Inclusiveness
IMF Working Papers, February 12, 2021
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- Regional Disparities, Growth, and Inclusiveness
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Bibliographic details
- Authors: Holger Floerkemeier, Nikola Spatafora
- Published: February 12, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513569505.001
Overview and key facts
- Title: Regional Disparities, Growth, and Inclusiveness
- Authors: Holger Floerkemeier, Nikola Spatafora
- Date: February 12, 2021
- Series: Working Paper No. 2021/038
- Issue: 038
- Volume: 2021
- Pages: 35
- DOI: https://doi.org/10.5089/9781513569505.001
- ISBN: 9781513569505
- ISSN: 1018-5941
- Subject: Housing, Income, Labor markets, Productivity, Wages
- Keywords: agglomeration economy, community development, earnings differential, Inclusive Growth., market forces, Place-Based Policies, Regional Disparities, supplier firm, wage competitiveness, wage difference, WP
- Summary key points:
- Presents key facts on regional disparities in economic performance and living standards.
- Provides a conceptual framework to analyze whether disparities are efficient or reflect market and/or policy failures.
- Examines whether policy attempts to reduce regional disparities necessarily involve a trade-off between equity and efficiency.
- Investigates policy focus: boosting economic performance of lagging regions versus assisting households in lagging regions through transfers, investments in education, health, and other basic services, and by facilitating out-migration.
Conceptual framework and analytical focus
- Framework purpose:
- To help analyze whether regional disparities are efficient outcomes or the result of market and/or policy failures.
- Analytical questions emphasized:
- Are observed regional disparities efficient (e.g., driven by agglomeration economies) or inefficient (e.g., driven by market failures or policy distortions)?
- Do policy interventions to reduce disparities entail an unavoidable equity-efficiency trade-off?
Findings and themes explored
- Core findings (as presented in the summary):
- Regional disparities exist in economic performance and living standards.
- There are multiple possible drivers of disparities, including agglomeration economies and market/policy failures.
- The relationship between policies aimed at reducing disparities and aggregate efficiency is complex and requires nuanced analysis.
- Policy-targeting considerations:
- Whether to prioritize boosting the economic performance of lagging regions.
- Alternatively, whether to accept regional disparities and focus on household-level assistance in lagging regions.
Policy options, trade-offs, and recommendations
- Policy approaches discussed:
- Boosting economic performance of lagging regions (place-based growth strategies).
- Assisting households in lagging regions through:
- Transfer payments.
- Investments in education.
- Investments in health.
- Investments in other basic services.
- Facilitating out-migration.
- Trade-off analysis:
- Examination of whether reducing disparities involves a trade-off between equity and efficiency, with emphasis on context-specific assessment rather than a presumption of an inevitable trade-off.
Publication and access notes
- Publication type: IMF Working Papers
- Stock No: WPIEA2021038
- Note: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Content summarized from "Regional Disparities, Growth, and Inclusiveness", Holger Floerkemeier and Nikola Spatafora, IMF Working Papers 2021, 038 (2021).
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