Bridging the Economic Divide within Nations : A Scorecard on the Performance of Regional Development Policies in Reducing Regional Income Disparities

Shankar, Raja ; Shah, Anwar

World Bank, Washington, DC

关键词: AGRICULTURAL SECTOR;    AGRICULTURE;    COMPARATIVE ADVANTAGE;    COMPETITIVE MARKET;    COMPETITIVENESS;   

DOI  :  10.1596/1813-9450-2717
RP-ID  :  WPS2717

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Regional inequalities represent acontinuing development challenge in most countries,especially those with large geographic areas. Globalizationheightens these challenges because it places a premium onskills: since rich regions typically also have bettereducated and better skilled labor, the gulf between rich andpoor regions widens. While central governments in unitarystates are relatively unconstrained in their choice ofpolicies for reducing regional disparities, in a federationthe division of powers curtails federal flexibility inpolicy choice. Thus in federal states large regionaldisparities can represent serious threats, with thestate's inability to deal with such inequities creatingpotential for disunity and, in extreme cases, fordisintegration. Inequalities beyond a threshold may lead tocalls for separation by both the richest and the poorestregions. While the poorest regional may consider theinequalities a manifestation of regional injustice, therichest regions may view the union with the poorest regionsas holding them back in their drive toward prosperity. Underthese circumstances, there is a presumption in developmenteconomics that decentralized fiscal arrangements would leadto ever widening regional inequalities. The authors providean empirical test of this hypothesis. The authors concludethat regional development policies have failed in almost allcountries, federal and unitary alike. Among 10 countrieswith high or substantial regional income inequality, onlyone (Thailand) has experienced convergence in regionalincomes. Still, federal countries do better in restrainingregional inequalities, because of the greater political riskthese disparities pose for such countries. The authorsclassify countries by degree of convergence in regionalincomes: a) Countries experiencing regional incomedivergence - Brazil, China, India, Indonesia, thePhilippines, Romania, the Russian Federation, Sri Lanka, andVietnam. b) Countries experiencing no significant change inregional income variation - Canada and Mexico. c) Countriesexperiencing regional income convergence - Chile, Pakistan,Thailand, the United States, and Uzbekistan. Regionaldevelopment outcomes observed in these countries provide arevealing look at the impact of regional developmentpolicies. While countries experiencing divergence tend tofocus on interventionist policies, those experiencingconvergence have taken a hands-off approach to regionaldevelopment and instead focused on promoting an economicunion by removing barriers to factor mobility and ensuringminimum standards in basic services across the nation. InChile, for example, convergence in regional incomes islargely attributable to liberalizing the economy andremoving distortions so that regions could discover theirown comparative advantage. In Pakistan and the United Statesconvergence is attributable to greater factor mobility.Paradoxically, creating a level playing field helpsdisadvantaged regions more than do paternalisticprotectionist policies.