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Regional policy: What is the most efficient instrument?

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  • Hélène Laurent
  • Michel Mignolet
  • Olivier Meunier

Abstract

Whatever the reasons at work – differences in locational endowments and/or externalities – a unit of capital is expected to be diversely productive according to the region where it is installed. This article determines which and the extent to which a regional policy could be implemented in order to make up for a productivity handicap. The model allows for comparing the efficiency of a productivity‐enhancing instrument (a publicly provided input) with that of instruments that affect capital cost (a lower corporate tax rate, an investment tax credit, or a capital subsidy). The approach is illustrated in the contemporaneous context of France. Resumen Cualquiera que sean las razones subyacentes – diferencias en dotaciones locales y/o externalidades – se espera que una unidad de capital sea diversamente productiva de acuerdo con la región en que se instale. Este artículo determina cuáles políticas regionales y hasta dónde podrían implementarse para compensar un hándicap de productividad. El modelo permite comparar la eficiencia de un instrumento de mejora de la productividad (insumo aportado públicamente) con la de instrumentos que afecten al costo de capital (una tasa fiscal corporativa más baja, deducciones imponibles por inversión, o subsidios al capital). El enfoque se ilustra dentro del contexto actual de Francia.

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  • Hélène Laurent & Michel Mignolet & Olivier Meunier, 2009. "Regional policy: What is the most efficient instrument?," Papers in Regional Science, Wiley Blackwell, vol. 88(3), pages 491-507, August.
    • Handle: RePEc:bla:presci:v:88:y:2009:i:3:p:491-507
    DOI: 10.1111/j.1435-5957.2008.00214.x
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    Cited by:

    1. Cécile Batisse & Nathalie Eyckmans & Olivier Meunier & Michel Mignolet, 2005. "Regional policy between efficacy and cohesion," ERSA conference papers ersa05p638, European Regional Science Association.
    2. Yihua Yu & Dan S. Rickman, 2013. "US state and local fiscal policies and non-metropolitan area economic performance: A spatial equilibrium analysis," Papers in Regional Science, Wiley Blackwell, vol. 92(3), pages 579-597, August.
    3. Rosa Canelli & Riccardo Realfonzo & Francesco Zezza, 2022. "An empirical Stock‐Flow Consistent regional model of Campania," Papers in Regional Science, Wiley Blackwell, vol. 101(1), pages 209-257, February.
    4. Brian W. Head, 2011. "Governance for sustainable regions: can government meet the innovation policy challenge?," Regional Science Policy & Practice, Wiley Blackwell, vol. 3(3), pages 219-230, August.
    5. Carmen Echebarria & Jose M. Barrutia & Itziar Aguado & Vanessa Apaolaza & Patrick Hartmann, 2016. "Capturing the benefits that emerge from regional sustainability networks: The Castile–La Mancha network of sustainable cities and towns," Papers in Regional Science, Wiley Blackwell, vol. 95, pages 27-49, March.

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