Bridging the Economic Divide within Nations : A Scorecard on the Performance of Regional Development Policies in Reducing Regional Income Disparities
Regional inequalities represent a continuing development challenge in most countries, especially those with large geographic areas. Globalization heightens these challenges because it places a premium on skills: since rich regions typically also ha...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2001/11/1637745/bridging-economic-divide-within-nations-scorecard-performance-regional-development-policies-reducing-regional-income-disparities http://hdl.handle.net/10986/19439 |
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okr-10986-19439 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
AGRICULTURAL SECTOR AGRICULTURE COMPARATIVE ADVANTAGE COMPETITIVE MARKET COMPETITIVENESS CONSTANT RETURNS CONSTANT RETURNS TO SCALE CONVENTIONAL WISDOM CONVERGENCE HYPOTHESIS COUNTRY COMPARISONS COUNTRY POPULATION CROSS COUNTRY DATA AVAILABILITY DECENTRALIZATION DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT OUTCOMES DEVELOPMENT POLICIES ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC POWER ECONOMIC REFORM EMPIRICAL ESTIMATES EMPIRICAL EVIDENCE EMPIRICAL TEST EQUAL DISTRIBUTION EXPORTS EXTERNALITIES GDP GINI INDEX GOVERNMENT EXPENDITURES GROWTH RATE GROWTH RATES HUMAN CAPITAL INCOME INCOME DIFFERENTIALS INCOME DISPARITIES INCOME DISTRIBUTION INCOME INEQUALITY INCOME LEVELS INCOMES INCREASING RETURNS INCREASING RETURNS TO SCALE INDEPENDENT VARIABLE INDUSTRIAL ECONOMIES INEQUALITY MEASURE INEQUALITY MEASURES INEQUALITY TRENDS MEAN INCOME NATURAL LOGARITHM PER CAPITA INCOME PERFECT COMPETITION POLICY RESEARCH POOR PERFORMANCE POPULATION SHARE POSITIVE GROWTH POSITIVE RELATIONSHIP PROGRAMS PUBLIC AGENCIES PUBLIC POLICIES REGIONAL DIFFERENCES REGIONAL DISPARITIES REGIONAL GROWTH REGIONAL INEQUALITIES REGIONAL INEQUALITY REGRESSION RESULTS RESOURCE ENDOWMENTS RURAL AREAS SKILLED LABOR SKILLED WORKERS STANDARD DEVIATION TECHNOLOGICAL CHANGE |
| spellingShingle |
AGRICULTURAL SECTOR AGRICULTURE COMPARATIVE ADVANTAGE COMPETITIVE MARKET COMPETITIVENESS CONSTANT RETURNS CONSTANT RETURNS TO SCALE CONVENTIONAL WISDOM CONVERGENCE HYPOTHESIS COUNTRY COMPARISONS COUNTRY POPULATION CROSS COUNTRY DATA AVAILABILITY DECENTRALIZATION DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT OUTCOMES DEVELOPMENT POLICIES ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC POWER ECONOMIC REFORM EMPIRICAL ESTIMATES EMPIRICAL EVIDENCE EMPIRICAL TEST EQUAL DISTRIBUTION EXPORTS EXTERNALITIES GDP GINI INDEX GOVERNMENT EXPENDITURES GROWTH RATE GROWTH RATES HUMAN CAPITAL INCOME INCOME DIFFERENTIALS INCOME DISPARITIES INCOME DISTRIBUTION INCOME INEQUALITY INCOME LEVELS INCOMES INCREASING RETURNS INCREASING RETURNS TO SCALE INDEPENDENT VARIABLE INDUSTRIAL ECONOMIES INEQUALITY MEASURE INEQUALITY MEASURES INEQUALITY TRENDS MEAN INCOME NATURAL LOGARITHM PER CAPITA INCOME PERFECT COMPETITION POLICY RESEARCH POOR PERFORMANCE POPULATION SHARE POSITIVE GROWTH POSITIVE RELATIONSHIP PROGRAMS PUBLIC AGENCIES PUBLIC POLICIES REGIONAL DIFFERENCES REGIONAL DISPARITIES REGIONAL GROWTH REGIONAL INEQUALITIES REGIONAL INEQUALITY REGRESSION RESULTS RESOURCE ENDOWMENTS RURAL AREAS SKILLED LABOR SKILLED WORKERS STANDARD DEVIATION TECHNOLOGICAL CHANGE Shankar, Raja Shah, Anwar Bridging the Economic Divide within Nations : A Scorecard on the Performance of Regional Development Policies in Reducing Regional Income Disparities |
| relation |
Policy Research Working Paper;No. 2717 |
| description |
Regional inequalities represent a
continuing development challenge in most countries,
especially those with large geographic areas. Globalization
heightens these challenges because it places a premium on
skills: since rich regions typically also have better
educated and better skilled labor, the gulf between rich and
poor regions widens. While central governments in unitary
states are relatively unconstrained in their choice of
policies for reducing regional disparities, in a federation
the division of powers curtails federal flexibility in
policy choice. Thus in federal states large regional
disparities can represent serious threats, with the
state's inability to deal with such inequities creating
potential for disunity and, in extreme cases, for
disintegration. Inequalities beyond a threshold may lead to
calls for separation by both the richest and the poorest
regions. While the poorest regional may consider the
inequalities a manifestation of regional injustice, the
richest regions may view the union with the poorest regions
as holding them back in their drive toward prosperity. Under
these circumstances, there is a presumption in development
economics that decentralized fiscal arrangements would lead
to ever widening regional inequalities. The authors provide
an empirical test of this hypothesis. The authors conclude
that regional development policies have failed in almost all
countries, federal and unitary alike. Among 10 countries
with high or substantial regional income inequality, only
one (Thailand) has experienced convergence in regional
incomes. Still, federal countries do better in restraining
regional inequalities, because of the greater political risk
these disparities pose for such countries. The authors
classify countries by degree of convergence in regional
incomes: a) Countries experiencing regional income
divergence - Brazil, China, India, Indonesia, the
Philippines, Romania, the Russian Federation, Sri Lanka, and
Vietnam. b) Countries experiencing no significant change in
regional income variation - Canada and Mexico. c) Countries
experiencing regional income convergence - Chile, Pakistan,
Thailand, the United States, and Uzbekistan. Regional
development outcomes observed in these countries provide a
revealing look at the impact of regional development
policies. While countries experiencing divergence tend to
focus on interventionist policies, those experiencing
convergence have taken a hands-off approach to regional
development and instead focused on promoting an economic
union by removing barriers to factor mobility and ensuring
minimum standards in basic services across the nation. In
Chile, for example, convergence in regional incomes is
largely attributable to liberalizing the economy and
removing distortions so that regions could discover their
own comparative advantage. In Pakistan and the United States
convergence is attributable to greater factor mobility.
Paradoxically, creating a level playing field helps
disadvantaged regions more than do paternalistic
protectionist policies. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Shankar, Raja Shah, Anwar |
| author_facet |
Shankar, Raja Shah, Anwar |
| author_sort |
Shankar, Raja |
| title |
Bridging the Economic Divide within Nations : A Scorecard on the Performance of Regional Development Policies in Reducing Regional Income Disparities |
| title_short |
Bridging the Economic Divide within Nations : A Scorecard on the Performance of Regional Development Policies in Reducing Regional Income Disparities |
| title_full |
Bridging the Economic Divide within Nations : A Scorecard on the Performance of Regional Development Policies in Reducing Regional Income Disparities |
| title_fullStr |
Bridging the Economic Divide within Nations : A Scorecard on the Performance of Regional Development Policies in Reducing Regional Income Disparities |
| title_full_unstemmed |
Bridging the Economic Divide within Nations : A Scorecard on the Performance of Regional Development Policies in Reducing Regional Income Disparities |
| title_sort |
bridging the economic divide within nations : a scorecard on the performance of regional development policies in reducing regional income disparities |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2001/11/1637745/bridging-economic-divide-within-nations-scorecard-performance-regional-development-policies-reducing-regional-income-disparities http://hdl.handle.net/10986/19439 |
| _version_ |
1764439864250466304 |
| spelling |
okr-10986-194392021-04-23T14:03:43Z Bridging the Economic Divide within Nations : A Scorecard on the Performance of Regional Development Policies in Reducing Regional Income Disparities Shankar, Raja Shah, Anwar AGRICULTURAL SECTOR AGRICULTURE COMPARATIVE ADVANTAGE COMPETITIVE MARKET COMPETITIVENESS CONSTANT RETURNS CONSTANT RETURNS TO SCALE CONVENTIONAL WISDOM CONVERGENCE HYPOTHESIS COUNTRY COMPARISONS COUNTRY POPULATION CROSS COUNTRY DATA AVAILABILITY DECENTRALIZATION DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT OUTCOMES DEVELOPMENT POLICIES ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC POWER ECONOMIC REFORM EMPIRICAL ESTIMATES EMPIRICAL EVIDENCE EMPIRICAL TEST EQUAL DISTRIBUTION EXPORTS EXTERNALITIES GDP GINI INDEX GOVERNMENT EXPENDITURES GROWTH RATE GROWTH RATES HUMAN CAPITAL INCOME INCOME DIFFERENTIALS INCOME DISPARITIES INCOME DISTRIBUTION INCOME INEQUALITY INCOME LEVELS INCOMES INCREASING RETURNS INCREASING RETURNS TO SCALE INDEPENDENT VARIABLE INDUSTRIAL ECONOMIES INEQUALITY MEASURE INEQUALITY MEASURES INEQUALITY TRENDS MEAN INCOME NATURAL LOGARITHM PER CAPITA INCOME PERFECT COMPETITION POLICY RESEARCH POOR PERFORMANCE POPULATION SHARE POSITIVE GROWTH POSITIVE RELATIONSHIP PROGRAMS PUBLIC AGENCIES PUBLIC POLICIES REGIONAL DIFFERENCES REGIONAL DISPARITIES REGIONAL GROWTH REGIONAL INEQUALITIES REGIONAL INEQUALITY REGRESSION RESULTS RESOURCE ENDOWMENTS RURAL AREAS SKILLED LABOR SKILLED WORKERS STANDARD DEVIATION TECHNOLOGICAL CHANGE Regional inequalities represent a continuing development challenge in most countries, especially those with large geographic areas. Globalization heightens these challenges because it places a premium on skills: since rich regions typically also have better educated and better skilled labor, the gulf between rich and poor regions widens. While central governments in unitary states are relatively unconstrained in their choice of policies for reducing regional disparities, in a federation the division of powers curtails federal flexibility in policy choice. Thus in federal states large regional disparities can represent serious threats, with the state's inability to deal with such inequities creating potential for disunity and, in extreme cases, for disintegration. Inequalities beyond a threshold may lead to calls for separation by both the richest and the poorest regions. While the poorest regional may consider the inequalities a manifestation of regional injustice, the richest regions may view the union with the poorest regions as holding them back in their drive toward prosperity. Under these circumstances, there is a presumption in development economics that decentralized fiscal arrangements would lead to ever widening regional inequalities. The authors provide an empirical test of this hypothesis. The authors conclude that regional development policies have failed in almost all countries, federal and unitary alike. Among 10 countries with high or substantial regional income inequality, only one (Thailand) has experienced convergence in regional incomes. Still, federal countries do better in restraining regional inequalities, because of the greater political risk these disparities pose for such countries. The authors classify countries by degree of convergence in regional incomes: a) Countries experiencing regional income divergence - Brazil, China, India, Indonesia, the Philippines, Romania, the Russian Federation, Sri Lanka, and Vietnam. b) Countries experiencing no significant change in regional income variation - Canada and Mexico. c) Countries experiencing regional income convergence - Chile, Pakistan, Thailand, the United States, and Uzbekistan. Regional development outcomes observed in these countries provide a revealing look at the impact of regional development policies. While countries experiencing divergence tend to focus on interventionist policies, those experiencing convergence have taken a hands-off approach to regional development and instead focused on promoting an economic union by removing barriers to factor mobility and ensuring minimum standards in basic services across the nation. In Chile, for example, convergence in regional incomes is largely attributable to liberalizing the economy and removing distortions so that regions could discover their own comparative advantage. In Pakistan and the United States convergence is attributable to greater factor mobility. Paradoxically, creating a level playing field helps disadvantaged regions more than do paternalistic protectionist policies. 2014-08-19T18:18:22Z 2014-08-19T18:18:22Z 2001-11 http://documents.worldbank.org/curated/en/2001/11/1637745/bridging-economic-divide-within-nations-scorecard-performance-regional-development-policies-reducing-regional-income-disparities http://hdl.handle.net/10986/19439 English en_US Policy Research Working Paper;No. 2717 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |