Place-based, Spatially Blind, or Both? Challenges in Estimating the Impacts of Modern Development Policies: The Case of the GMR Policy Impact Modeling Approach

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Abstract

Two modern approaches to development policy have recently evolved and disputed with each other, namely, the space-neutral and the place-based approaches. Perhaps the most notable conceptual development common in these modern approaches is a strong awareness of the key role of geography in policies targeting aggregate economic growth. Thus, it became clear in the new policy thinking that the impact of countries’ structural policies largely depends not only on the specific instruments (e.g., human capital development, infrastructure investments, and small- and medium-sized enterprises support) but also on the concrete patterns in which these instruments are deployed geographically. It is suggested in this article that macroeconomic models that integrate geography could usefully help policy makers in their choice among different complex geography-instrument mixes. I survey the most important modeling challenges raised by the two modern economic development approaches. To illustrate how economic models can respond to these challenges, I briefly introduce the Geographic Macro and Regional (GMR)–Europe model. To complete the illustration with a practical example, an impact analysis of a space-neutral–place-based policy mix implemented in regions of the European Union (EU) is presented. It is found that promoting research excellence in leading agglomerations combined with human capital development in the rest of the regions in Europe could result in a sustained positive gross domestic product impact of EU Framework Programs at the aggregate EU level. Nevertheless, it is also important to emphasize that the aggregate impact masks marked regional differences.

Original languageEnglish
Pages (from-to)12-37
Number of pages26
JournalInternational Regional Science Review
Volume40
Issue number1
DOIs
Publication statusPublished - Jan 1 2017

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Keywords

  • DSGE models
  • EU Framework Programs
  • Geographic Macro and Regional (GMR) economic impact modeling
  • knowledge production function
  • place-based development
  • SCGE models
  • smart specialization
  • space-neutral development

ASJC Scopus subject areas

  • Environmental Science(all)
  • Social Sciences(all)

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