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Development Strategies and Economic Growth in a Changing World

Staff members involved: Dr Andrés Rodríguez-Pose|

This multidisciplinary project studies two stylised facts closely linked to globalisation. The first one is -as stressed by the endogenous growth and convergence literature- the recent change in the evolution of regional growth trends across the globe: whereas until the early 1980s regional convergence was the norm, over the last two decades convergence has waned or, in some cases, given way to divergence. A parallel political change has been -as underlined by the new regionalism strand- the global ascendancy of subnational governments, either in the form of regional devolution (in formerly centralised states) or of greater transfers of power to subnational units (in federal or decentralised states).

The result of these trends is that in a period when the need for effective development policies seems greater than ever, the power to devise and implement them lies increasingly with regional governments. Yet, within an ever more integrated world, the capacity of regional authorities to address the question of inequalities is limited. This has led in some cases to the adoption of innovative policies, but it has also brought about greater territorial competition. The research project focuses on the theoretical implications of these trends and analyses the effectiveness of current regional development strategies. Case studies include Europe, Brazil, Mexico, the US, India, and China. The project combines the quantitative analysis of the evolution of regional disparities and of the factors influencing regional change, with the study of the transfer of powers to subnational governments in the areas of analysis, before resorting to selected case studies of regional development policies.

The economics of devolution: Recent political and academic discourse about devolution has tended to stress the economic advantages of the transfer of power from national to subnational institutions. This 'economic dividend' arises through devolved administrations' ability to tailor policies to local needs, generate innovation in service provision through inter-territorial competition, and stimulate participation and accountability by reducing the distance between those in power and their electorates. There are, however, many forces that accompany devolution and work in an opposite direction. Devolved governmental systems may carry negative implications in terms of national economic efficiency and equity as well as through the imposition of significant institutional burdens. In addition, the economic gains and costs that devolution may engender are contingent, to some extent, upon which governmental tier is dominating, organizing, propagating and driving the devolutionary effort.