Bridging the Economic Divide Within Countries: A Scorecard on the Performance of Regional Policies in Reducing Regional Income Disparities |
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| Institution: | 1. Retired Research Professor, Department of Bioengineering, Binghamton University, PO Box 6000, Binghamton, NY 13902 USA;2. College of Community and Public Affairs, Binghamton University, PO Box 6000, Binghamton, NY 13902 USA;1. Faculty of Financing and Banking, WSB University in Poznan, ul. Powstańców Wielkopolskich 5, 61-895 Poznań, Poland;2. Department of Econometrics, Poznań University of Economics and Business, Al. Niepodległości 10, 61-875 Poznań, Poland;3. Department of Microeconomics, Poznań University of Economics and Business, Al. Niepodległości 10, 61-875 Poznań, Poland;1. School of Business, Central South University, Changsha, Hunan 410083,China;2. Institute of Metal Resources Strategy, Central South University, Changsha, Hunan 410083, China;1. Princeton University, United States;2. Federal Reserve Bank of Minneapolis, United States |
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| Abstract: | Regional inequalities represent a continuing development challenge in most countries. There is a presumption in development economics that decentralized fiscal arrangements would lead to ever-widening regional inequalities. This paper provides an empirical test of this hypothesis. We conclude that regional development policies have failed in almost all countries, federal and unitary alike. Still, federal countries do better in restraining regional inequalities, because of the greater political risk these disparities pose for such countries. Our findings also suggest that countries experiencing divergence tend to focus on interventionist policies, while those experiencing convergence have taken a hands-off approach to regional development and instead focus on promoting an economic union by removing barriers to factor mobility and ensuring minimum standards in basic services across the country. |
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