036_LOCAL AND REGIONAL DEVELOPMENT_2017_665

SEÁN Ó RIAIN

Lazonick, W. (1991) Business Organisation and the Sabel, C. (1994) “Learning by Monitoring:
Myth of the Market Economy. Cambridge: The Institutions of Economic Development”,
Cambridge University Press. in N. Smelser and R. Swedberg (eds) The
Handbook of Economic Sociology. Princeton, NJ:
Le Gales, P. (2002) European Cities. Oxford: Princeton University Press.
Oxford University Press.
Sabel, C. and Zeitlin, J. (2004) “Neither Mod-
Lester, R. K. and Piore, M. (2004) Innovation – The ularity nor Relational Contracting: Inter-
Missing Dimension. Cambridge: Harvard firm Collaboration in the New Economy”,
University Press. Enterprise and Society, 5, 388–403.

Lorenz, E. and Valeyre, A. (2007) “Organizational Sassen, S. (1990) The Global City. Princeton, NJ:
Forms and Innovative Performance: A Princeton University Press.
Comparison of the EU-15”, in E. Lorenz and
B. Lundvall (eds) How Europe’s Economies Learn. Saxenian,A. (1994) Regional Advantage: Culture and
Oxford: Oxford University Press. Competition in Silicon Valley and Route 128.
Cambridge, MA: Harvard University Press.
Markusen, A. (1996) “Sticky Places in Slippery
Space: A Typology of Industrial Districts”, Saxenian, A. (2006) The New Argonauts: Regional
Economic Geography, 72, 29–313. Advantage in a Global Economy. Cambridge,
MA: Harvard University Press.
Moulaert, F. and Sekia, F. (2003) “Territorial
Innovation Models: A Critical Survey”, Saxenian,A. and Sabel, C. (2008) “Venture Capital
Regional Studies, 37:3, 289–302. in the ‘Periphery’:The New Argonauts, Global
Search, and Local Institution Building”,
Mowery, D. (2009) “Plus ca change: Industrial Economic Geography, 84:4, 379–394.
R&D in the ‘Third Industrial Revolution’”,
Industrial and Corporate Change, 18:1, 1–50. Saxenian,A. and Sabel, C. (2009) A Fugitive Success:
Finland’s Economic Future. Helsinki: SITRA.
Ó Riain, S. (2000) “Net-Working for a Living: Available at: http://www.sitra.fi/julkaisut/
Irish Software Developers in the Global raportti80.pdf?download.
Workplace”, in M. Burawoy et al. (eds) Global
Ethnography. Berkeley: University of California Scott, A. and Storper, M. (eds.) (1986)
Press. Production, Work, Territory: the Geographical
Anatomy of Industrial Capitalism. Boston: Allen
Ó Riain, S. (2004) The Politics of High Tech Growth: Unwin.
Developmental Network States in the Global
Economy (Structural Analysis in the Social Sciences Storper, M. (1997) The Regional World: Territorial
23). New York/Cambridge: Cambridge Development in a Global Economy. London:
University Press. Guilford Press.

Ó Riain, S. (2006) “Time–Space Intensification: Storper, M. (2000) “Globalisation and Knowledge
Karl Polanyi, the Double Movement, and Flows:An Industrial Geographer’s Perspective”,
Global Informational Capitalism”, Theory and in J. Dunning (ed.), Regions, Globalization and
Society, 35, 5–6, 507–528. the Knowledge-Based Economy. Oxford: Oxford
University Press.
Pastor, M., Benner, C. and Matsuoka, M. (2009)
This Could be the Start of Something Big: How Storper, M. and Walker, R. (1991) The Capitalist
Social Movements for Regional Equity are Imperative: Territory, Technology and Industrial
Reshaping Metropolitan America. Ithaca, NY: Growth. Oxford: Basil Blackwell.
Cornell University Press.
Sturgeon, T. (2002) “Modular Production Net-
Peck, J. and Theodore, N. (2007) “Variegated works: A New American Model of Industrial
Capitalism”, Progress in Human Geography, 31:6, Organization”, Industrial and Corporate Change,
731–772 11, 451–496.

Piore, M. and Sabel, C. (1984) The Second Industrial Sturgeon, T. J. (2003) “What Really Goes-on in
Divide. New York: Basic Books. SiliconValley? Spatial Clustering and Dispersal
in Modular Production Networks”, Journal of
Reich, R. (1991) The Work of Nations. Economic Geography, 3, 199–225.
New York: Vintage Books.
Whitford, J. and Potter, C. (2007) “Regional
Ross, A. (2008) “The New Geography of Work: Economies, Open Networks and the Spatial
Power to the Precarious?”, Theory, Culture and Fragmentation of Production”, Socio-Economic
Society, 25: 7–8, 31–49. Review, 5, 497–526.

Ruggie, J.G. (1982) “International Regimes, Zook, M. A. (2005) The Geography of the Internet
Transactions and Change: Embedded Industry: Venture Capital, Dot-coms and Local
Liberalism in the Postwar Economic Order”, Knowledge. Oxford: Blackwell Publishers.
International Organization, 36: 379–415.

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GL O BA LIZATION A N D R EGION AL D EV E LOPMEN T

Further reading the face of globalization, in ways that go well
beyond enhancing competitiveness.)
Brenner, N. (2004) New State Spaces. Oxford: Lester, R. K. and Piore, M. (2004) Innovation – The
Oxford University Press. (A sophisticated Missing Dimension, Cambridge, MA: Harvard
theory of the interconnections between glo- University Press. (A study of the role of public
balization, urban restructuring and new state spaces in the innovation process and the role
forms and spaces.) of industrial districts and universities in
developing those spaces.)
Gereffi, G., Humphrey, J. and Sturgeon, T. (2005) Piore, M. and Sabel, C. (1984) The Second Industrial
‘The Governance of Global Value Chains’, Divide. New York: Basic Books. (One of
Review of International Political Economy, 12, the classic accounts of the importance of
78–104. (A review and development of regional economies in a world of flexible
the global value chains commodity chains specialization.)
perspective.) Saxenian, A. (2006) The New Argonauts: Regional
Advantage in a Global Economy. Cambridge,
Harvey, D. (2005) A Brief History of Neoliberalism. MA: Harvard University Press. (A rich explo-
Oxford: Oxford University Press. (A wide- ration of the ways in which the technical com-
ranging account of the economic, political and munities typically found in regions such as
spatial dimensions of neoliberalism.) Silicon Valley are emerging on a transnational
basis, promoting a network of global regions.)
Heidenreich, M. and Wunder, C. (2008) “Patterns Whitford, J. and Potter, C. (2007) “Regional
of Regional Inequality in the Enlarged Economies, Open Networks and the Spatial
Europe”, European Sociological Review, 24:1, Fragmentation of Production”, Socio-Economic
19–36. (Evidence from the EU of growing Review, 5, 497–526. (Reviews the ‘state of the
inequalities between regions within countries art’ in the analysis of regional production net-
and of convergence among regions across works.)
countries.)

Le Galès, P. (2002) European Cities. Oxford:
Oxford University Press. (A wide-ranging
investigation of how cities are changing in

29

3

Territorial competition

Ian Gordon

Introduction broader, however, encompassing not only
attraction of inward investment, but all/any
The notion of territorial competition refers forms of collective action which served its
to a form of collective action, undertaken on purposes. The point is not to treat all these
behalf of economic interests within a partic- forms as equivalent, but rather to direct
ular territory, which serves to advance these attention to the choices made among them
in competition with those of interests located in different contexts, instead of treating the
in (some or all) other territories (Cheshire practice of one or another in isolation.
and Gordon, 1995, 1996). From one per-
spective, this involves an extension to broader Defining territorial competition in this
spatial scales of the types of location market- broad way might seem to make it synony-
ing traditionally practised by private devel- mous with local/regional economic devel-
opers. Alternatively, it may be seen as opment in general, and thus not worth
extending local governments’ use of public discussing separately in this volume. But
goods provision to attract/retain desired resi- there are two distinguishing features which
dents into the productive economy. A more give analyses of territorial competition a par-
distinctive third dimension to the process ticular flavour. The first is that they do not
involves specific investment in organisational presume that such competition is necessarily
assets to create a market in membership of functional – whether for a territory which is
the territory’s economic community (Gordon pursuing it, or for a wider set of areas – or
and Jayet, 1994). indeed dysfunctional. Rather that is a key
question to be investigated, both theoretically
The concept was developed in the con- and empirically. Second, their dual emphasis
text of integrating European economies in on collective action and particular economic
the 1980s and 1990s, where such competition interests raises questions about the political
attained a new importance.In North America processes underlying specific forms of terri-
particularly, local competitive activity in the torially competitive activity (or their absence).
form of boosterism had been a well-known From this perspective, there is nothing inevi-
phenomenon for very much longer (see e.g. table about a commitment to any serious form
Cobb, 1982; Ward, 1998). The idea of ‘terri- of local/regional economic development –
torial competition’ is intentionally much even given a more solid understanding

30

TERRITORIAL COMPETITION

(than in the past) of how these can/should be resources or to optimise outcomes across a
pursued. Rather it is expected to depend on wider territory.
those structures, institutions and constraints
which shape political action, and inaction, Over the past quarter century, territorial
within the areas concerned. Nor does the competition seems to have become a global
idea of territorial competition presume that phenomenon, spreading beyond Europe/
the interests to which it is directed will natu- North America to play a strong role (for
rally or necessarily be those of the local good and bad) in the development of newly
economy/residents as a whole. Rather the industrialised and transition economies
expectation is that the mixture of interests (Rodríguez-Pose and Arbix, 2001; Chien
which are effectively served will reflect the and Gordon, 2008; Hermann-Pilath, 2004,
same political processes that determine Jessop and Sum, 2000), and with sub-national
whether and in what ways ‘places’ actually agencies in many countries playing key roles
develop one form or another of competitive/ in the competition for FDI (Oman, 2000).
developmental activity. In each context, a characteristic interplay
between political and economic factors
The perspective is thus essentially one of shapes the form, intensity and outcomes of
political economy – giving a central role local economic development policies –
to the interaction between ‘political’ and sometimes with important consequences for
‘economic’ processes – and might be seen as national development too. But the expecta-
an extended/generalised version of the North tion is that these will play out in different
American analyses of ‘growth machines’ ways, depending on a set of economic, polit-
(Molotch, 1976). However, the aspiration of ical and institutional characteristics which
those writing within a ‘territorial competi- figure within a general model of territorial
tion’ framework is not simply to provide a competition. In the remainder of this chap-
critical exposé of the gulf between idealised ter, we shall look in turn at: the economics
expectations of place-based economic devel- of place competitiveness; the politics of ter-
opment and the thrust of ‘actual existing’ ritorial competition; and a normative frame-
competitive activity. The aim is rather to work for assessing outcomes from the process
develop the kind of realistic understanding of and regulating it; before summarising key
the behavioural and political economy fac- issues.
tors which is necessary if ways are to be
found to correct the biases in how local/ Place competition, place
regional development functions or fails in competitiveness and territorial
particular kinds of context. competition

The significance of such factors is substan- Spatial competition may be understood in
tially affected by the territorial dimension, several different ways in relation to local eco-
since the areas on behalf of which competi- nomic development policies. In particular,
tive actions are to be pursued will generally there are three that need to be distinguished,
be far from closed in economic terms, or which for convenience we will refer to as
completely autonomous politically. This place competition, place competitiveness and
presents a pair of key issues about: the extent territorial competition (though these terms
to which such activities could or should have are not used consistently in the literature).
effects outside the initiating areas (‘spatial
externalities’ in the jargon); and how higher Place competition: At the most basic level, it
levels of government/governance – whether is a simple matter of fact that individuals and
regional/national or international – may con- businesses located in a particular area tend to
strain these territorially competitive activities,
whether just to conserve their own power 31

IAN GORDON

compete not only with each other, but also for others who sell price-sensitive products
with people/businesses located in other areas. in external markets. Despite such uncertain-
The competitive position of each, in terms of ties, the existence of spill-over effects means
price and quality, reflects a combination of that members of the local community may
factors – associated with: the assets they have reasonably believe that they have some
available; the technologies they can deploy; stake in the competitive success of local busi-
costs/prices in the local market; extraneous nesses and residents – even when there is no
influences on supply/demand in their spe- collective involvement either in producing
cialisms; and ‘pure chance’. Their combined competitive assets or in sharing out their
effect across all local businesses/individuals benefits.
produces some places which are ‘winners’ in
terms of aggregate activity/earnings levels, Place competitiveness: Outcomes of such
while others are ‘losers’ in the place compe- inter-place competition may be wholly or
tition. Whether or not this division has evi- largely determined by exogenous factors.
dent local causes, it is likely to have local There are cases, however, where the com-
consequences – though not all of the place’s petitive position of representative firms in an
businesses/residents will be affected in the area is substantially influenced by the pres-
same way (or at all). ence or absence of quasi-public goods, i.e. of
competitive assets which are freely available,
What it means for a business to be ‘located’ on a non-rivalrous basis, to all located within
in an area can vary greatly, depending on: the area. Relevant examples could include:
who owns it; the status/role of local opera- facilities traditionally provided (if at all) by
tions; and how far these are embedded in local authorities (e.g. education, transporta-
the local economy. Direct benefits from the tion, specialist research institutes); others
competitive success of local business estab- dependent for their existence/sustainability
lishments (in product markets) and local resi- on appropriate regulation of private activities
dents (on labour markets) clearly accrue to by such an authority (e.g. via development
those who own the crucial assets, notably: planning); and a further set whose provision
shareholders, who may or may not live with- essentially depends on private activity, but
in the area (in the first case); and those with where economic incentives cannot be
increasingly valued kinds of human capital, counted on to secure (any or adequate) pro-
who may or may not remain within it (in the vision (e.g. pools of skill/tacit knowledge
second case). In addition, their success is and support services, or networks of estab-
likely to have some positive income spill- lished cooperation). What these competitive
overs within the local/regional economy, in assets have in common is that they are endog-
terms of property values, money wages and enous in character, in the sense that their
(probably) employment rates. availability is not fixed but rather reflects
the shaping of an area through a combina-
Spatial economic theory suggests that the tion of its economic history and its political
effects on property values will tend to be economy (Massey, 1984).
localised, because these assets are immobile,
whereas the labour market effects may get The importance of place competitiveness
rapidly and widely diffused. For the average in terms of such assets has been substantially
resident, real (expected) earnings may not enhanced over the past quarter century or so
actually change, though there will generally be by two broad shifts in the form and intensity
both winners and losers within any affected of economic competition. The first involves
economy. If the supply of local residential/ the market for mobile industrial or commer-
commercial space is somewhat inelastic, the cial investment projects, which grew sub-
success of some local businesses will mean stantially in importance as constraints on
higher costs for all, thus lowering the demand

32

TERRITORIAL COMPETITION

trade, communications and multi-plant co- knowledgeable consumers and vigorous
ordination of productive activities were suc- competition – and combine in ways that
cessively overcome (between the 1960s and allow fortunate places to offer distinctive
1980s). As far as inward investment was con- kinds of environment relevant to firms occu-
cerned, this enlarged the pool of potential pying different types of market niche.As with
projects which could be ‘won’, even by less Krugman’s (1995) more aggregative empha-
established centres. As a result, however, the sis on the strength of agglomeration econo-
practice became much more competitive, mies, Porter’s evidence for the beneficial
since firms with plants to locate could now effects of clustering implied that such places
actively consider many more locations, and could enjoy continuing dynamic benefits
play these off against each other. And, at (i.e. faster growth), rather than simply one-
the same time, the existing activity base of off (or temporary) boosts to the level of local
economic ‘territories’ (both old and new) activity.
became more vulnerable both to the reloca-
tion of specific functions from established Territorial competition: One further step
centres that could now be made to operate in beyond this, ‘territories’ – or some body
some cheaper location, and to onward move- acting on their behalf – may be seen as play-
ment by footloose recent arrivals, tempted by ing an active collective role in securing the
better ‘deals’ offered elsewhere. The second conditions to promote competitive success
involves a quite widespread (though still for firms and individuals based in their
ongoing) shift in the basis of product market area. This is the strong sense of purposive
competition from simple price (or value-for- ‘territorial competition’, rather than of
money) criteria to quality (or rather to the simply de facto ‘place competition’ or ‘place
distinct qualities of differentiated products). competitiveness’.
This shift toward some version of ‘flexible
specialisation’ (Piore and Sabel, 1984; Storper, For this concept to be applicable, it is
1989) seems partly to have reflected changes necessary first of all for there to be substantial
in the tastes of (more affluent) consumers, aspects of place competitiveness which can be
facilitated by new production technologies manipulated in predictable/positive ways by
which made short production runs much some collective agency in the territory.That
more economic. But in the advanced econo- is partly a technical issue, as to whether such
mies it also represented a defensive response agencies possess both the relevant expertises
by home producers who could no longer and effective autonomy to apply them. But it
attempt to match prices from plants in those is also a political one, because of the diversity
low-wage economies that now offered feasible of economic interests within any territory,
locations for relatively standardised products. which not only complicates the process of
mobilising collective action but also increases
In Porter’s (1990) terms, this shift allowed the likelihood of it being captured by par-
businesses, and the places that housed their ticular sectional interests.
core functions (‘home bases’), to develop dis-
tinctive forms of ‘competitive advantage’ as There is a theoretical precedent for such
an alternative to the ‘race to the bottom’ purposive activity in Tiebout’s (1956) treat-
which pure price competition (and compar- ment of inter-jurisdictional competition
ative advantage) promised in an increasingly between (nearby) local authorities offering
globalised economy.The kinds of local public rival bundles of local public goods/tax rates
goods that appear to sustain competitive to attract residents.Within the framework of
advantage of this kind are themselves qualita- his analysis, such competition serves – as
tive – in relation to capabilities of local sup- authoritative decision-making on its own
pliers,complementary skill/knowledge pools, could not – to stimulate provision of an opti-
mal mix of public goods – including those

33

IAN GORDON

generated directly by an optimal pattern of of it – we cannot assume that it will necessar-
residential segregation.This outcome depends ily be pursued in practice in any serious/
crucially on three assumptions which are a effective way. In general, governmental activ-
good deal more problematic when translated ities tend to be sustained through a high
to the context of competition for economic degree of inertia – with demands and sup-
activity rather than residents: a large number ports flowing from established sources,
of competing jurisdictions, each of efficient organised client groups, vested staff interests,
size and with free mobility between each; public expectations and programmed opera-
absence of any impacts spilling over territ- tions. Getting additional or novel responsi-
orial boundaries; and jurisdictions simply bilities into the portfolio requires more
motivated to maximise growth (in Tiebout’s pressure, to overcome initial hurdles and win
version) or ‘profits’ (Bewley, 1981). Where a start-up budget, in situations where poten-
these do not apply, competition alone will tial beneficiaries are liable to be less well
not necessarily secure desirable outcomes, organised than in cases where policy activity
independent of the processes through which itself sustains organisation.This has two likely
policies are shaped and regulated. consequences. The first is that where new
activities do make it on to the agenda and
Famously, Krugman (1996a) has argued crowded budgets of public agencies they may
against the pursuit of ‘competitiveness’ poli- not be very substantially resourced. The
cies on behalf of territories (whether national second is that, where they are, the form in
or urban/regional), for reasons most com- which they are pursued may strongly reflect
monly identified with the claim that unlike the particular political forces that managed to
firms they ‘cannot go bankrupt’). The rele- get them there.
vance of that argument is not clear – since
firms do not compete only to avoid extinc- The emergence since the 1980s of a new
tion. But it can be understood as part of a set of arguments for local economic develop-
broader concern about the lack of mecha- ment policies and/or more strategic forms of
nisms to ensure that policies advocated in territorial competition is a case in point, for
these terms are actually geared to advancing places lacking a longer history of such activ-
overall economic interests, rather than some ity. For such arguments, and the real eco-
(disguised) sectoral benefits involving larger nomic circumstances they invoke, to generate
costs for others in the economy, as he believes robust forms of competitive activity depends
to be much more commonly the case on a combination of:
(Krugman, 1996b). Just as at the national
scale protection for the steel industry may be at the micro-level: effective mobilisation
(falsely) claimed to advance overall US com- by potential beneficiaries with the capac-
petitiveness (Krugman, 1996b), so at the ity to organise themselves into a successful
urban scale boosterist arguments may be used promotional coalition within a suitably
to generate profits for developers while resi- defined territory; and
dents suffer in fiscal and environmental terms
(Molotch, 1976). at the macro-level: tolerance and/or active
support by higher levels of government
The politics of territorial for local agencies to take on independent/
competition competitive roles in pursuit of economic
development for their territories.

Even where there is a strong functional argu- The micro-level requirement has two aspects.
ment for a public agency to take on some par- The more basic is the presence within the
ticular role – and widespread understanding territory concerned of a set of actors with

34

TERRITORIAL COMPETITION

significant ‘spatially dependent’ economic be identified. The first starts from Olsen’s
interests and the political/economic resources observation that very small groups of actors
to pursue these (Cox and Mair, 1988). Such with large individual stakes in a particular set
interests may include: ownership of land or of linked outcomes can more easily secure
immobile infrastructure; dependence on their mutual engagement than can any larger
local markets, particularly where sales rely on group. This leads to an expectation that
persona; contact/reputation, or non-local major-landowning/development interests are
expansion is otherwise constrained (as his- the most likely core for a viable coalition
torically with state-based banks, utilities, etc. (as in Molotch’s ‘growth machines’ in the
in the US;Wood, 1996); or other locally net- US).A second involves a bias toward histori-
worked assets. For public authorities it may cally dominant sectors, including staple
involve: dependence on a local tax-base (as in industries in structural decline, on the basis
e.g. North America, though much less in that these are liable to have the strongest
Western Europe); for individual public offi- habits of cooperation, and most generally
cials it may involve: career prospects linked to credible construction of what the territory’s
measured local economic performance (as in collective interests might be.The last embod-
China; Chien and Gordon, 2008). Their ies a bias toward (greater) localism on similar
strength is institutionally variable therefore, grounds. At a general level, the political
but within nations is also likely to vary with economy perspective raises a suspicion that
different patterns of specialisation, and the such coalition-building is more likely to
balance between local and (multi-)national serve elite interests than those of the average
firms. Additionally, however, these interests local resident, and to encourage an under-
need some basis for getting round the funda- standing of local development processes that
mental dilemma of collective action, as Olsen conflates the two.
(1971) identified it: namely that it is rarely in
the immediate interest of those with a recog- Beyond this, the specific kinds of bias
nisable stake in the success of some collective that have been identified suggest potentially
action,actually to expend significant resources serious biases toward types of policy which
of their own in pursuing it. Where no such are less likely than others to advance a terri-
basis exists, the likely outcome is some purely tory’s strategic economic prospects, by: focus-
symbolic ‘competitive’ activity.This warrants ing excessively on attracting inward investors
a critical look at how substantively signifi- to prestige new property developments; a
cant much advertised developmental action form of ‘lock-in’ which concentrates on rein-
actually is. But where particular bases are vigorating mature/obsolete sectoral com-
found for escaping this dilemma, these will plexes, rather than on renewing the local
have consequences, first for the composition economic base; and/or defining the econom-
of the promotional coalitions that emerge, ically relevant territory too narrowly, ignor-
and then (consequentially) for the set of ing complementarities with neighbouring
‘collective interests’ and policies that come to areas, which are treated instead as the key
be pursued – which also require careful competitors.
examination (Cheshire and Gordon, 1996).
At the macro-scale, two key considerations
Some circumstances may just be generally are the degree of centralisation of, first, the
supportive of cooperation, on the basis of state and, second, of national politics. On the
solidaristic sentiments (as in the case of one hand, state centralisation (as in say the UK
national minorities such as Catalans in Spain). or France as against effectively federal states)
But at best these provide a starting point, simply limits the scope of territorial agencies
and other factors will generally produce for genuinely independent action, as in the
biased outcomes. Three common forms can case of West European states before the
1980s, where both economic policies and

35

IAN GORDON

fiscal control were jealously guarded monop- threats, national (or EU-wide) regional poli-
olies of the central government. One factor cies have been promoted to sustain political
in the eventual rise of territorial competition cohesion – rather than the ‘economic and
here seems to have been recognition that social cohesion’to which EU policies are nom-
within a Single European Market where inally directed. And these may be adapted
urban services became freely tradable urban to assist, integrate (and domesticate) nascent
competitiveness became a matter of national forms of territorial completion, through
economic interest. In some developmental conditional funding in relation to national
states elsewhere, notably China (Chien and goals and programmes (Gordon, 1990).
Gordon, 2008), mobilisation of local com-
petitive forces, within a framework of con- To summarise, while the pursuit of mate-
tinuing central control, has been seen more rial interests of one kind or another is
directly as a servant of national economic fundamental to the politics of territorial
objectives. competition – and hence to the policy mix
and outcomes to be expected from it – this
In relation to politics, the issue is rather does not mean that any reasonably free
different, relating to the role that territory market economy should be expected to
plays in the processes through which national develop a common form of territorial com-
power is acquired. On the one hand are petition, operating with similar intensity, and
highly integrated systems in which political producing the same mix of outcomes. Rather
conflict/competition is fought out on a the political economy perspective suggests
nation-wide basis in relation to generally that territorial competition – and thus local
recognised ideological differences and/or economic development as conventionally
socio-economic groupings (as has tended to understood – should operate in ways that
be the case in Western Europe, or in India are highly contingent, but related in intelligi-
through the 1950s/1960s). On the other are ble ways to a small set of factors. These
systems where national power is to a greater include the character of national politics, the
degree acquired through politicking in a institutional/regulatory regimes under which
series of semi-independent territorial poli- territorial agencies operate, local economic
ties, serving as arenas for political contests structures, and the significance of territorial
played out on different bases.This has always assets for interests within the local economy
been the case in the US, but is also true in (Figure 3.1). In no case, however, can it be
Brazil (Ames, 1995) and became so in India presumed that an effective capacity to engage
after the 1980s when the dominant Congress in territorial competition can necessarily
party lost its political cohesion (Schneider, be mobilised, or that this would serve a set
2004). In these situations, where power has of community-wide economic interests.
to be built up sub-nationally, the territorial
division of economic activity (as of the ‘pork Outcomes: good, bad and
barrel’) is an inescapable aspect of politics, regulated
and constrains any potential development of
nation-wide ideological or class-based com- Like other kinds of policy, economic develop-
petition. Territorial competition is then (for ment policies launched under a territorially
better or worse) an expected and natural competitive initiative may yield unsatisfactory
component of the political system. By con- outcomes – whether through poor policy
trast, in the former case, serious territorial choice or failure to assure the necessary con-
competition presents a potential challenge to ditions for implementation (including actual
the maintenance of an integrated national provision of all required resources, including
politics (and party system) structured around finance, skills and compliance). Other chapters
such nation-wide issues. In the face of such

36

TERRITORIAL COMPETITION

ECONOMIC COMPETITION
range, intensity and forms

NATIONAL POLITICS TOP-DOWN REGULATION of TC
structures and processes by nation-state, European Union, etc.

LOCAL STRUCTURES SIGNIFICANCE of AUTONOMY and
organisational and political TERRITORIAL ASSETS POLICY CAPACITY
of territorial agencies
for local interests

SELECTIVE MOBILISATION
for collective action toward TC

MIXES of TC POLICY
adopted and pursued

SECTORAL, SOCIAL and
SPATIAL EXTERNALITIES

positive and negative

Figure 3.1 Processes shaping territorial competition (TC).
Source: Adapted from Chien and Gordon (2008: 7)

in this volume provide ample examples of this. The distinctions here are not quite as simple
But territorial competition presents some as they look. In the first case, even the most
specific issues in relation to the desirability of ‘wasteful’ policy is likely to yield benefits to
outcomes which can be related to the condi- somebody, even if only to those who worked
tions under which such activity comes into on it, the politician publicly launching it, or
being in particular places and times. the mobile firms who succeed in extracting
a high price for their locational favours.The
One starting point for thinking about the basis on which we should judge whether
problem is a simple normative distinction some policies are ‘purely wasteful’, however, is
between policies which are (and may be whether they involve net losses overall to the
expected to be): territorial agency’s legitimate stakeholders.
In the second case, ‘zero-sum’ policies are
Purely wasteful – with no net gains; ones that escape the ‘pure waste’ category, by
yielding net benefits to stakeholders within
Zero-sum in their effects – i.e. purely the agency’s own territory, but do so simply
redistributive, with gains for some being by capturing benefits from elsewhere (maybe
matched by losses for others; and in the form of mobile firms or product
market share), or imposing comparable costs
Economically productive/capacity-build- on other areas. Essentially then, they are
ing – with overall net gains across the
system (Cheshire and Gordon, 1998). 37

IAN GORDON

spatially redistributive in their effects, possi- However, if almost everyone participates
bly in ways that improve spatial equity, but as in such competition, e.g. by offering cash
likely, or more, not to do so. In most cases we incentives/tax breaks to firms who will
might expect there to be no equity issue, locate a plant in their area, the expected net
since competitive interactions of this kind benefits may be very low, with only a modest
most commonly involve areas in a similar penalty for abstinence. For any given project
economic position, and/or within the same potentially available to, and desired by, all
functional economic region (for the latter territories, models of the competitive process
see e.g. LeRoy, 2007). demonstrate how the ‘winning’ area will have
to offer an incentive (of financial plus any
To the extent that economically stronger natural advantages) at least equal to the per-
areas have more assets to deploy in such ceived value of this project for the area
competition, however, in the absence of which attaches the second highest value to it
external assistance to assist the competitive (King and Welling, 1992). From the perspec-
efforts of others, there is likely to be some tive of an average territory, participation in
bias toward outcomes that reduce rather than such contests may then move toward the
enhance spatial equity. Often, however, sub- ‘purely wasteful’ category, with zero expected
stantial effort may be required to achieve this gains and significant entry costs. In the US,
outcome, including effort expended in con- at least, these entry costs increasingly include
tests where the territory ultimately loses the employment of site consultants, who
out to other active competitors, as well as offer territories the prospect of net gains
in those where it ‘wins’. Taking these ‘trans- through access to superior information, but
action costs’ into account, the aggregate serve primarily to boost competitive activity
result of seeking to compete on this basis will (Markusen and Nesse 2007; Thomas, 2007).
generally involve negative-sum outcomes Indeed it is striking that in a recent listing of
(i.e. net costs overall), rather than simply a nine ways to curtail the ‘economic war’
zero balance. among the US states, at least two-thirds were
clearly directed at issues involving waste
For the active territorial ‘players’ (i.e. places for the states involved,while only one focused
pursuing such gains, through e.g. policies to on issues of ‘zero-sum’ inter-state predation
attract mobile firms) the expected pay-off (LeRoy, 2007). OECD’s international study
might still be expected to be positive – at similarly emphasises the advantages for
least relative to the position they could expect states in pursuing transparent, rules-based
to be in if they refrained from competing. approaches and avoiding rent-seeking (Oman,
This is often presented as a ‘prisoner’s 2000).A careful econometric review of likely
dilemma’ situation, in that active players may impacts of state and local economic develop-
not actually achieve gains as compared with ment incentives in the US concludes that:
the status quo but be forced into competi-
tion by the knowledge that they will end up for an average incentive project in a
worse off if they refrain and allow others to low unemployment local labor market,
take all the spoils (see e.g. Ellis and Rogers, benefits and costs are of similar magni-
2000).That danger can seem particularly real, tude....whether the net benefits are
given a great excess demand for mobile positive or negative is unclear.
investment projects, meaning that agencies
cannot tell when the next desirable project (Bartik, 2005: 145)
might come along. For example, Thomas
(2008) cites an estimate from Loveridge The implication is that for a substantial pro-
(1996) of just 200–300 large-scale projects portion of such projects the balance will be
annually in the US being pursued by some clearly negative (even without taking account
15,000 investment attraction agencies.

38

TERRITORIAL COMPETITION

of the fixed costs of competing). Examples of petition literature, we can thus identify three
such purely wasteful financial competition broad types of pathology in the way that sub-
are numerous, including cases where regions national economic development activities
within a developing economy end up com- are characteristically conducted – whether in
peting with each other for FDI projects, as advanced or developing economies, and
in the Brazilian ‘car-wars’ documented by whether in liberal democracies or more
Rodríguez-Pose and Arbix (2001). authoritarian regimes. These involve: a ten-
dency for territorial agencies to pursue poli-
The same logic applies where territories cies that are unlikely to yield net benefits for
offer not actual cash payments (maybe their constituents; an over-emphasis on com-
because that is unlawful in their position) but peting against other areas (often within their
rather a standard package of generalised con- own functional regions) for a limited pool of
cessions or locational attractors, fitted to the investment projects, whether directly or via
needs of a typical firm with mobile projects. generalised promotional strategies; and a
In such cases, for projects with few locational failure to focus effectively on developing
constraints, all regions within a country (if distinctive assets that could build a competi-
not further afield) are effectively competing tive advantage in particular economic niches,
with each other, and monopoly power rests where territories could credibly establish
with the firm just as in the textbook case of some market power. As Turok (2009) indi-
tax/subsidy competition. This monopoly cates, this requires more than simply espous-
power derives ultimately from an excess ing the idea, or adopting some conventional
demand from territories for mobile projects, notion of how distinctiveness can be achieved
which no individual agency can significantly (whether through high-tech, creativity or
modify.But it is substantially reinforced when iconic design).
areas pursue undifferentiated attraction and
incentive policies,which allow firms to extract These failings might be seen simply as
the maximum rent, by pitting all potential components of a ‘low road’ development (or
locations against each other. perhaps underdevelopment) strategy,for which
other chapters offer a more detailed critique.
By contrast, the economically productive/ Where the Territoral Competition (TC) per-
capacity-building category of policies includes spective differs from other parts of the Local
not just the now familiar range of ‘high Economic Development (LED) literature is
road’ initiatives aimed at boosting the long- in suggesting that these pathologies are not
run productivity of local business and public simply reflections of ignorance, incompetence
sector activity (Sengenberger and Pyke, 1992; or lack of sophistication on the part of LED
Malecki, 2004); but also selective attraction practitioners. Rather they are seen as predict-
of inward investors within specific target able outcomes of the problematic politics of
groups, using incentives that emphasise and building collective territorial action, and of
reinforce distinctive actual/potential strengths more or less rational behaviour on the part of
of the particular territory. Pursuit of distinc- those actively engaged in it. An obvious
tiveness – with a locational offer that other example is the neglect of spatial externalities
territories could not match – could then by those territorial agencies which focus on
serve as a means of countering the monopoly the competitive aspect of their relations with
power of the mobile firm, both at the point other areas (including their neighbours),
of inward location and subsequently, when it rather than the potential for collaboration.
might otherwise threaten an onward move. The seriousness of this problem clearly varies
Where successful, this strategy would allow ter- both with the extent to which agencies
ritories themselves to show net benefits from (including local governments) are free to
induced inward investment (Wins, 1995). pursue whatever competitive initiatives they
From the perspective of the territorial com-
39

IAN GORDON

choose, and with the particular pattern of the area which is supposed to benefit – if not
incentives facing them. from special interests in these areas.

In the first respect there has been a marked Beyond this, however, the TC analysis
contrast, between a general lack of constraint wants to situate these issues in a root problem
on state/local competition in North America, of the building of effective collective action
and the situation in Western Europe, where to pursue competitive strategies on behalf of
national governments have traditionally a representative set of interests across coher-
restrained ‘wasteful’ domestic competition, ent economic units. Without some active,
and the EU has buttressed this with an effec- independent source of leadership, it is argued,
tive cross-national regime limiting the use of the structures and forms of intervention that
state aid for competitive purposes (Sinnaeve, are developed will be subject to some combi-
2007). In relation to incentive structures nation of: weakness in resource terms, leading
there may be a similar pattern of difference to the adoption of superficial, symbolic poli-
among advanced economies, with those cies, including a substantial element of copy-
(notably the US) which make sub-national ing of conventional/fashionable initiatives
governments substantially autonomous in (isomorphism, as Chien (2008) terms it),
fiscal terms encouraging more cut-throat rather than development of tailored/differen-
competition, than those where fiscal federal- tiated strategies; and structural biases, reflect-
ism dilutes the financial gains (or even elimi- ing the unrepresentative sub-sets of interests
nates them, in the UK case). Elsewhere, as which are able spontaneously to build viable
in China, the central state may actually pur- coalitions to promote competitive initiatives,
posively design the incentive structure to including particularly those with stakes in
encourage, not simply tolerate, vigorous local development projects for which inward
competitive action (Chien and Gordon,2008). investment is an essential requirement.
Translating some version of the European
regulatory system to other national/regional Conclusion: competition,
contexts seems a rational response to the evi- competitiveness and local
dent neglect of spatial externalities by which economic development
territories’ competitive activities are uncon-
strained, though there is scepticism of its Place competitiveness as well as place com-
feasibility in the US case (Sinnaeve, 2007; petition are clear realities in an economic
Thomas, 2005). environment, where market competition is
pervasive and strong place characteristics play
From theTC perspective, however, neglect a crucial role in protecting communities
of such externalities is not the only issue from race-to-the bottom forms of pure price
involved in the pathology of predatory incen- competition. There is a functional role thus
tive competition.As important are: the exces- to be filled by collective actors who can
sive localism of the ‘territories’ on behalf of respond coherently, rationally and in a repre-
which agencies act (relative to the scale of sentative way to the challenge of building
functional economic units); and the seem- and sustaining the appropriate combination
ingly irrational bias toward inward investment of territorial assets.
as the central priority in much competitive
activity (Cheshire and Gordon, 1998).These Vigorous market competition between
are important in themselves, because a large places ought to provide both motive and the
proportion of incentive-based competition right set of incentives to steer public agencies
actually involves nearby areas which should toward more effective performance in sup-
logically be collaborating on a common devel- port of this activity. However, the capacity to
opment strategy, and because much of this fill these roles is not naturally or necessarily
appears wasteful even from the perspective of

40

TERRITORIAL COMPETITION

available, and the collective action problem of the Association of American Geographers, 78,
in evolving appropriate action coalitions is 307–325.
such that rhetoric about competition and Ellis, S. and Rogers, C. (2000) ‘Local Economic
competitiveness will often not be matched Development as a Prisoners’ Dilemma: The
by organisations and activity which are both Role of Business Climate’, Review of Regional
genuinely substantial/strategic and repre- Studies, 30, 315–330.
sentative of the collective economic interests Gordon, I.R. (1990) ‘Regional Policy and
of functional relevant territories. To under- National Politics in Britain’, Environment and
stand the limits of actual existing LED activ- Planning C: Government and Policy, 8, 427–438.
ity and the forms of ‘competition’ in which it Gordon, I.R. and Jayet, H. (1994) ‘Territorial
engages – and progressing beyond these – it Policies between Co-operation and Com-
is necessary then to attend to the ways in petition’, CESURE working paper, 12E/94.
which contextual influences on the political University of Lille, Lille.
base of territorial competition shape (and Hermann-Pillath,C.(2004)‘Competitive Govern-
bias) the choice of policies and the way they ments, Fiscal Arrangements, and the Provision
are implemented. of Local Public Infrastructure in China: A
Theory-Driven Study of Gujiao Municipality’,
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42

4

Local and regional ‘Development Studies’

Giles Mohan

Introduction: What is teleology, these opposing tendencies are con-
development? tained within capitalism” (Hart 2001: 650).
This forces us to consider not only how
Discussing local and regional development in Global capitalism must be actively “created
the Global South necessitates engaging with and constantly reworked” (ibid.), but in a
empire, race and nation.The whole idea and Gramscian sense how it can be resisted and
practice of development is marked by imbal- made otherwise.
ances of power about who decides what
defines development, who its agents are, and Within this counter-movement the rela-
what territories it constitutes. It is vital, tionship between power and knowledge is a
therefore, to begin by asking how we under- form of governmentality (Watts 2003). In
stand development. My starting point is practice, this means analysing “the rationali-
Hart’s (2001: 650) distinction between ‘D’ ties of rules, the forms of knowledge and
and ‘d’ development whereby: expertise they construct, and the specific and
contingent assemblages of practices, materials,
‘big D’ Development (is) defined as agents and techniques through which these
a post-second world war project of rationalities operate to produce governable
intervention in the ‘third world’ that subjects” (Hart 2004: 92). Governmentality
emerged in the context of decolonisa- has been used to examine international
tion and the cold war, and ‘little d’ NGOs and multilateral agencies, and the
development or the development of intersection of different spaces of power (e.g.
capitalism as a geographically uneven, Ferguson and Gupta 2002). Hence, know-
profoundly contradictory set of his- ledge about development and its practical
torical processes. application in ‘management’ and ‘planning’ is
very much about control and discipline.
Hart follows the Polanyian view that
unleashing of markets generates a ‘counter- From its inception in the Enlightenment,
movement’. Hence, “Far from the counter- development has involved trusteeship, which
movement representing some sort of external saw science and state direction coming
intervention in an inexorably unfolding together to secure the basis of social harmony
through a process of national development.
Colonial trusteeship was all about the

43

GILES MOHAN

mission to civilize others and to give expe- to treat the developing world as so excep-
rience to the ‘child-like’ colonial peoples. tional as to require a different set of analytical
While trusteeship was often rejected after concepts or development studies imports
1945, because of its colonial connotations, concepts into inappropriate situations. This
the idea ‘implicitly reappears’ many times in exceptionalism is manifested in a number
post-war conceptions of international devel- of ways.
opment (Cowen and Shenton 1996). During
this period many former colonial administra- First is a ‘provincialising’ impetus arguing
tors went on to take posts with NGOs like that globalization has missed out much of the
OXFAM or taught university courses on developing world, so for all intents and pur-
development administration and manage- poses we can ignore them. They simply do
ment (Kothari 2006). This is not to view not matter to the dominant forces that shape
colonial administration as a homogenous set the contemporary world. But as the brief dis-
of practices and ideas but rather to seek to cussion of McMichael’s work (ibid.) shows,
understand the continuities to ‘post-colonial’ globalization has affected the Global South in
times, even as important changes have taken numerous ways and is significant for the lives
place in the ideology of development. of those living there, even if they are rela-
tively powerless. Increasingly, the neoliberal
While the D/d development framework consensus of McMichael’s globalism informs
gives us a dialectic for understanding how all development policy,whether in the Global
development functions structurally that is not North or South, which has seen a conver-
to say that historical changes do not occur. gence of concerns around entrepreneurial-
An important issue for studying develop- ism, cost recovery and devolution, and with
ment is the ways in which discourses and it an attempt to apply similar institutional
practices have evolved. McMichael’s (2000) economic theories to planning.
characterization of development having
moved from‘developmentalism’to‘globalism’ Second is an ‘exoticizing’ tendency, which
is instructive here, as is his observation that runs that ‘the other’ in the Global South
such moves have been a response to the are so different culturally and politically that
crises of a previous regime. McMichael argues ‘we’ can never really comprehend them.
that developmentalism, essentially a social- This lack of comprehension is manifested
democratic welfarism, was a response to the in mono-causal explanations (Chabal 1996),
crisis of nineteenth-century monetary con- with policy makers accepting crude takes
trol via the gold standard and the destablizing on politics, which they would never accept
effects of the two World Wars. As we will in analysing their own situations. Or we
see, this Keynesian developmentalism came see potentially patronizing ‘participatory’
during the period of formal decolonization approaches, which are discussed later, that
and underpinned state-led, protectionist and encourage the ‘beneficiaries’ to reveal their
redistributive development policy. Globalism, needs through child-like, playful techniques
by contrast, is a counter-mobilization to the that actually conceal the ignorance of the
constraints of social protectionism, which policy researcher.
seeks to engender market rule through insti-
tutional coercion which has weakened the Third is a spatial and intellectual separation
power of some states. which parcels together inappropriate territo-
ries and scales. On the one hand, we get a
But how does the discipline of Deve- geographical separation with Development
lopment Studies function as part of the govern- Studies focusing on the ‘over there’ regions,
mentality of development? In general there which generates a spatial, ethical and episte-
has been a tendency, generated by both those mological distance between the producers of
outside development studies and within it, the knowledge about development and the
subjects of this knowledge. As Eyben (2006)
44

LOCAL AND REGIONAL ‘DEVELOPMENT STUDIES’

argues, such distancing absolves elites in the process of enlightening the peoples of the
Global North from much of the responsibil- Tropics. The colonies thus became national
ity for poverty in both their own countries property to be nurtured and milked of their
and the Global South. On the other hand, surplus yet tied to a discourse of modernity
we get an intellectual separation with eco- which promised to bring civilization and
nomics, politics, etc. doing their own things, religion to the ‘savages’.
but Development Studies does all these
things, but at a more superficial level (Pieterse In terms of the double-movement of D/d
2001). This lack of learning and dialogue development the periphery fulfilled a number
undermines all knowledge about the world. of functions. First and foremost it was a
However, one of the advantages of Devel- source of cheap raw materials as well as a
opment Studies is that it has, with varying market for manufactured goods. In terms of
degrees of success, tried to move beyond the disciplining labour the prosperity generated
economism that has afflicted local and by colonialism was a way of placating the
regional development studies in the Global working classes in the developed core while
North (Pike et al. 2006). Through the work the colonies could be a sink for surplus
of theorists such as Sen (1999) and political labour, thereby ameliorating the tensions
moves of ‘social development’ researchers generated by unemployment. At a politico-
challenging the economism of institutions cultural level nationalist and racist ideolo-
like the World Bank (Booth 1994), Devel- gies created ‘others’ which was a means of
opment Studies’ apparent eclecticism is better cementing working-class solidarity at home.
attuned to a world of concrete and complex Concomitantly this primary affinity to one’s
problems as opposed to the sometimes debil- fellow countryman or woman undermined
itating disciplinary divisions of academia. international labour solidarity. And despite
overbearing economic motives there was
Colonialism, uneven undoubtedly a hegemonic role in the acqui-
development and sition of colonies as a means of cementing
post-colonialism Global dominion.

The origins of both D/d development lie Crucially for understanding the origins of
in the colonial period. Industrialization in development and trusteeship, the colonial
Europe was funded to a great extent from state was established in order to facilitate
the profits of these overseas activities while economic exploitation and maintain order.
the growth of wealth consequent upon the In this sense its role was more functionalist
industrial revolution saw increased demand than any state form before or since.AsYoung
for tropical luxury goods as well as those (1994: 75) observes of colonialism in Africa,
used in industrial production. This height- “African societies were to encounter a colo-
ened demand saw more formal colonization nial master equipped with doctrines of dom-
from the 1870s as systems were established ination and capacities for the exercise of
for intensive production, which in turn led rule that went far beyond those available in
to the emergence of an international division earlier times and other places”. The initial
of labour based around states and nationally conquest required strong coercion but force
centered MNCs (Hirst andThompson 1996). had diminishing returns so that other means
Ideologically, the colonial mission was justi- of promoting hegemony were required.
fied through a twin movement of protecting
the competitiveness of the metropole vis-à-vis In terms of territorial boundaries colonial
other imperial powers, but also as a necessary dominions were often built up in piecemeal
fashion and both the colonial and post-
colonial states were faced with problems of
political integrity (Davidson 1992). Not only
were state forms imported but also languages

45

GILES MOHAN

and other cultural vestiges that ‘colonized the the colonised countries. But this in no
mind’ and reinforced the political and eco- way undermines the argument that the
nomic subordination. Not surprisingly given development initiative was necessary
the economic imperative and lack of legiti- as a means to overcoming obstacles to
macy these political structures were central- the further accumulation of capital.
ized, leading to what Mamdani (1996) labels
the ‘decentralized despotism’ of the colonial (Phillips 1977: 17)
state. For Mamdani (1996: 8, 18) this “crystal-
lized a state-enforced separation, of the rural This contradiction saw numerous forms of
from the urban and of one ethnicity from resistance ranging from hidden acts of defi-
another...two forms of power under a single ance, to guerrilla movements and formalized
hegemonic authority. Urban power spoke independence movements. Crucially anti-
the language of civil society and civil rights, colonial nationalism concealed other social
rural power of community and culture”.This divisions, particularly the class nature of
model was decentralized insofar as it empow- imperialism.With decolonization these social
ered local elites with the colonial district divisions became more apparent and once
commissioner exercising a high degree of again development emerged as one key dis-
local discretion, while preaching a discourse of course attempting to mobilize the nation in
local community. order to contain these contradictions.

The early phases of colonialism were con- With the ending of formal colonization in
cerned with repression and consolidation the period from 1947 to the mid-1960s,
whereas the mature colonies saw high rates control of the world system was achieved via
of urbanization as land was gradually given new forms of imperialism which operated, in
over to production. These changes were many respects, at arms-length. New forms of
accompanied by a change in colonial ideo- US-backed geo-economic governance were
logy centered on development. Britain’s 1929 put in place through the Bretton Woods
Colonial Development and Welfare Act Institutions, ideological legitimation was
enshrined the idea of development as a way actively stoked through the Cold War, and
of placating and sanitizing (literally) the grow- development policy was based around a
ing urban populations. The contradictions seemingly benign theory of modernization
of colonialism threw up varied political and ‘catch-up’.
responses.Therefore, the concern with devel-
opment and other seemingly philanthropic Independence came to Latin America
acts was stimulated by an emerging political around a century before Asia and Africa, but
threat and recognition of the colonial project’s the region remained tied into imperialist
weakness. Phillips asserts that the inability to relations. As such it was no coincidence that
overcome entrenched socio-economic struc- many of the radical underdevelopment theo-
tures and the rise of nationalist opposition was ries should emerge from this region and
disadvantageous to capitalist accumulation. quickly find resonance among the newly
She notes that: independent countries of Africa and Asia. At
independence there was a strong sense of
widespread acceptance of development optimism among Western-based theoreticians
as a legitimate objective, and the sub- and many leaders of developing countries.
sequent acknowledgement of a respon- This period of what McMichael (2000) terms
sibility on the part of the advanced ‘developmentalism’, from the early 1950s,
countries for aiding this process, can came on the heels of the relative success of
be interpreted initially as no more than Soviet planning in the inter-war period, the
a response to the political crises of post-war reconstruction of Europe under
Marshall Aid and the Bretton Woods confer-
46 ence on international economic cooperation.

LOCAL AND REGIONAL ‘DEVELOPMENT STUDIES’

Learning from these, development econom- In a perverse way, the Cold War permitted
ics was founded on the Keynesian rejec- ruling regimes in the South a degree of
tion of mono-economics and the belief in autonomy as they could play the superpowers
‘mutual benefits’ between rich and poor off against one another. However, a country’s
countries, which saw a positive role for aid ability “to exploit such a relationship, or to
(Hettne 1995). be damaged by it, depends on various con-
junctural factors and agendas which are rarely
In terms of interventions “development under their control” (Corbridge 1993: 188).
necessitated plans, written by economists, For example, India’s import substitution
and strong, active governments to implement industrialization programme of the 1950s and
them” (Hettne 1995: 38). This ‘positivist 1960s was made possible through American
orthodoxy’ hinged on a benevolent state, food aid subsidizing agricultural production,
which acted in the common good and was but tied India into a pro-American stance.
peopled by impartial, technocratic elites.
As Cooke (2003) notes this saw the change Many post-independence regimes espoused
from colonial development to a focus on a brand of state socialism which had its
development management, with colonial roots in the centralized nationalist struggles
service training centres in the North becom- which prevailed especially in English colo-
ing the new Development Studies depart- nies (Davidson 1992). As ‘non-alignment’
ments. Cooke argues that despite this change became increasingly impossible as a result of
the essential architecture of intervention did the Cold War, anti-imperial political ideolo-
not alter and was still based around notions gies centered on Marxist-Leninism emerged
of trusteeship and ‘knowing best’ what the (Corbridge 1993). With them came dis-
Third World needed. Crucially the assump- courses of centrality and modernist rational
tion was that proprietary rights would endure planning which were distilled in import-
after independence so the colonialists were substitution policies and/or Soviet-style five-
not unduly concerned. year plans (Conyers and Hills 1984).

Modernization theory built on a critique Another key discourse inherent in this
of Keynesianism and focused attention on kind of socialism was development.Following
why development failed to occur given independence the social tensions in many
these well-conceived theories and suppos- countries became more apparent so national
edly geared-up state structures.Modernization development became one means of attempt-
theory was very much an American body of ing to contain them. As legitimacy becomes
work, richly funded by the US government, increasingly threatened:
reflecting a belief in American superiority
and inseparable from the Cold War concerns the government of a developmentalist
of the time. It retained teleological models state authorises its rule over the asso-
of evolutionary change, but focused on the ciation of people who form the state,
social and political barriers to self-sustained according to a principle of legitimacy
growth. Given its roots in the classical soci- which leads the government to claim
ology of Western Europe, where such pro- that it represents the common interest
cesses had largely occurred, modernization of the people and is thus concerned
theory naturally appeared as a form of with ‘national development’.
Westernization. The practical ramifications
of modernization theory go to the heart (Rakodi 1986: 435)
of the Cold War since it justified concerted
investigation of foreign countries and aid Hence, in the early days of independence
budgets targeted at socio-cultural (read ideo- “the national plan appears to have joined the
logical) change. national anthem and the national flag as
a symbol of sovereignty and modernity”

47

GILES MOHAN

(Conyers and Hill 1984: 42).The drawing of under structural adjustment to bypass the
a national plan allowed the state to fall back central state.
on an authoritative document as a defence
against clan-based pressures, it promised But despite this centralized manipulation
future prospects thereby securing compliance of decentralized planning, it failed as a devel-
in the present, and presented a competent opment strategy for more local reasons. One
analysis for donors to work around. is due to local patronage and elite structures.
For example, in Uganda’s decentralization
However, all such interventions were at program Francis and James (2003) identify
the expense of the rural areas and decentral- the patronage outcomes of decentralization
ized political administration. While many in which the limited fiscal resources passing
states were centralized, this centralization lay through local government are contested by
in tension with sub-national planning and the locally powerful. Such ‘elite capture’
decision-making. The legacy of Mamdani’s (Crook and Manor 1998) strengthens local
‘decentralized despotism’, discussed above, governance in their favor. A further factor in
conditioned the structure and possibilities of the failure of decentralized planning, and one
post-colonial planning. For various reasons that the participatory approaches discussed
centralization has been exacerbated by the below ostensibly address, is that the impover-
dependent nature of post-colonial states and ished who are the intended targets of inter-
the internal logic of their bureaucratic devel- ventions have little time and energy for
opment. In this way spatial planning inter- becoming involved in local politics and
ventions may, as Samoff (1979) notes with are skeptical anyway given the legacies of
respect to Tanzania, “be understood as the colonial divide and rule. Finally, there is the
self-protective reaction of the bureaucratic weak capacity of much sub-national govern-
bourgeoisie to challenges to its power and ment, although this speaks of the political
economic base” (p. 55). Hence, Slater (1989) misuse of decentralization which promises
shows how decentralization within post- much, yet never really devolves resources to
colonial states functions as a form of rule. localities (Crook and Sverrisson 2001).
First, where territorial disaggregation threat-
ens national integration the response very The Second World War marked the tri-
often was to “control local government by umph of US hegemony and with it a set of
strict legislation and through the new poli- institutions for managing Global relations.
ticized structure of the district administ- The Bretton Woods System was established
ration” (Subramaniam 1980: 586), since it at an international summit in 1944 and sought
factionalizes and fragments political opposi- to build a system for managing the Global
tion. This usually involved placing political economy following the rivalries which had,
appointees in key positions in local govern- in part, precipitated the Second World War.
ment and ensuring elected members com- The International Monetary Fund (IMF) was
plied with party policy. Second, as Boone set up as a central fund which member coun-
(2003) shows, regimes often promoted devel- tries paid into and could then draw upon in
opment programs that notionally built upon times of balance of payment disequilibria.
local energies because this absolves them of The International Bank for Reconstruction
responsibility for welfare provision while and Development (IBRD), more commonly
earning political capital by apparently being known as the World Bank, was also estab-
sensitive to local issues. Longer standing lished to assist in post-War reconstruction
ministerial hierarchies have also contested and financed sectoral programs or discrete
devolution of power and sought to maintain infrastructure projects.
control of key resources, which as we will
see has been a key feature of the attempts The Bretton Woods System worked rea-
sonably well throughout 1950s and 1960s,
48 but began to break down in the 1970s when

LOCAL AND REGIONAL ‘DEVELOPMENT STUDIES’

the international regulation of exchange rates excessive.At the same time the oil-producing
was abandoned for flexible, market rates states in the Middle East formed OPEC,
which coincided with the deregulation of whose oil price rises precipitated a period of
international banking and the oil boom of recession that fueled the labor unrest. The
the 1970s (Hirst and Thompson 1996). This price rises and recession hit the developing
meant that creditworthy countries could world hard as the markets for their raw mate-
borrow money privately to finance their def- rials declined and their oil bills increased.
icits and fund development projects. During What was an oil crisis for many was a wind-
this period the Bretton Woods Institutions, fall for the oil producers who had excess rev-
especially the IMF, lost much of their raison enue.These so-called ‘petrodollars’ needed to
d’être and were restructured and reoriented be put to use and so at a time when the
toward being ‘development’ institutions Bretton Woods System began to break down
(Mohan et al. 2000). there was a great deal of cheap credit availa-
ble to developing countries which needed to
The oil crises, debt and shore themselves up against their own reces-
disciplinary neoliberalism sions and to stave off legitimacy crises.Debate
exists about the efficacy of this lending, but it
The neoliberal counter-revolution of the turned even sourer when interest rates rose
late 1970s and 1980s was based intellectually sharply in the late 1970s and ushered in the
on a refutation of Keynesian theory and a debt crisis for most developing countries.
hard-to-deny realpolitik about the venal
nature of political regimes in the Global South. Hence, from the late 1970s, a period of
In analyzing the spread of neoliberalism restructuring began which was premised upon
Peck and Tickell (2002) make the case for a the state strategies of Thatcherism in the UK
process-based analysis of “neoliberalization”, and Reaganomics in the USA.With the col-
arguing that the transformative and adaptive lapse of the Soviet bloc a decade later, the
capacity of this political-economic project way was open for a new form of political and
has been repeatedly underestimated.Amongst economic hegemony, based around a logic of
other things, this calls for a close reading of capitalism, a discourse of neoliberalism and a
the historical and geographical (re)constitu- politics of thin multilateralism among a
tion of the process of neoliberalization and of handful of powerful liberal states (Agnew
the variable ways in which different “local and Corbridge 1995).This was known as the
neoliberalisms” are embedded within wider ‘Washington Consensus’. For its architects, the
networks and structures of neoliberalism. key was not the oil crisis itself, but the erro-
Neoliberalism operates at multiple scales and neous way that most developing countries
more attention needs to be paid to the differ- had responded. Rather than opening up to
ent variants of neoliberalism, to the hybrid world market competition,they looked inward
nature of contemporary policies and pro- via various import-substituting mechanisms,
grams and to the multiple and contradictory heavy borrowing and a swathe of inflation-
aspects of neoliberal spaces, techniques and inducing measures. From this analysis, the con-
subjects. clusion ran that developing economies must
become more externally oriented and, con-
While the Cold War lasted until the late comitantly, freed from malevolent dirigisme.
1980s changes were already afoot which sig-
naled its demise and the apparent ‘triumph’ The Structural Adjustment programs
of liberal capitalism. In the early 1970s, labour which followed sought to correct these
unrest in the core capitalist countries was rife ‘market-distorting’ problems by seeking to
and the power of the unions was seen as remove the state from as many areas of eco-
nomic life as possible. The pressing need to
stem the balance of payments problem and

49

GILES MOHAN

begin debt repayment meant that revenue position without radically altering it. For
generation and cutting expenditure were example, social capital theories brought ques-
paramount. The policies which flowed from tions of political culture to the fore, but only
this involved the privatization of State insofar as it contributes to capitalist democ-
Owned Enterprises, the introduction of user racy (Fine 2001). More problematically, the
charges for state services, and a variety of actual implementation of adjustment pro-
civil service reforms. grams ran headlong into the political realities
of diverse countries. The state institutions
In the process of adjustment the state was through which deregulation was taking
restructured since deregulation of markets place were also part of the political apparatus
entails the reregulation of political space which stood to lose power to markets and
which leans towards authoritarianism. Con- therefore fought to protect their position.
trary to the zero-sum ‘state or market’ model Some institutional ‘weaknesses’ were there-
some parts of the state were strengthened fore more like filibusterism. It was these
while others were trimmed. In general broad movements which drove the ‘good
during adjustment the presidential and exec- governance’ agenda of the 1990s.
utive branches of the state took over much
of the decision-making which was bolstered The publication of Sub-Saharan Africa:
by the repressive power of the military. In from crisis to sustainable growth (World Bank
such cases conservative-technocratic politi- 1989) marked a watershed in thinking about
cians became leaders with the business class governance, both on the African continent
and the middle classes providing political and beyond. In the document, the (World
support. For example, in Cote d’Ivoire Bank 1989: 60) argued that “political legiti-
President Houphouet Boigny clamped down macy and consensus are a precondition for
so heavily on opposition parties that a situa- sustainable development”. The new govern-
tion arose of “multi-partyism without oppo- ance agenda saw “democracy is a necessary
sition” (Aribisala 1994: 140). prior or parallel condition of development,
not an outcome of it” (Leftwich 1993: 605,
In addition, there was the problem of insti- original emphasis).This opens the way for a
tutional capacity in terms of implementing whole range of institutional and democratic
development initiatives. Under neoliberal reform programs aimed at getting the politics
regimes we saw a small, technocratic clique right in order to bring about economic
generally placed in the finance ministries development. This was a significant change
that ‘formulated’ policy in collaboration with from the early days of the adjustment era
World Bank and IMF officials. Hutchful’s where politics and the state were seen as a
(1989: 122) analysis of Ghana concluded: hindrance.
“What has emerged in Accra is a parallel
government controlled (if not created) by Neoliberalism impacted upon sub-
the lender agencies”. This lack of accounta- national planning in a number of ways. The
bility contradicted the calls for transparency good governance agenda of the donors
and democracy in the liberalization process included a measure of decentralization. In
and persists today under the second-generation the 1970s, decentralization was centered on
structural adjustment programs (Hickey and the public and, to a lesser extent, the volun-
Mohan 2008). tary sector. Almost a decade later, and well
into the ‘adjustment era’, Rondinelli et al.
The one-size-fits-all neoliberal approach (1989) included privatization and deregula-
tends to underestimate the variations within tion as forms of decentralization.The World
and between states and regimes in less devel- Bank’s own policies reflect these trends in
oped countries. At a theoretical level this led which decentralization “should be seen as
the neoliberals to restate their argument, part of a broader market-surrogate strategy”
but added insights which complicated their

50

LOCAL AND REGIONAL ‘DEVELOPMENT STUDIES’

(World Bank 1983: 23). Since the mid-1980s, ‘service delivery gap’. Major lenders and
then, decentralization became one of the donors were wary of using inefficient states
mainstays of the localizing good governance to deliver program funds so they channelled
agenda and promoted in a wide range of them through the supposedly less corrupt,
countries (Crook and Sverrisson 2001; more efficient and locally sensitive NGOs. In
Mohan 1996). a parallel to their market philosophy, it is
better to have inefficient NGOs than ineffi-
However, neoliberal policies have for cient states.The second reason relates to the
many increased social hardships (Easterley governance philosophy that strengthening
2006) which led to political tensions; the civil society will automatically lead to deep-
so-called ‘IMF riots’ of the 1980s and 1990s ened democracy. However, the idea that the
being the most visible examples (Walton and ‘local’ can become a site for empowerment
Seddon 1994), although the civil war in ignores the ways that the state is able to
Sierra Leone in the 1990s has also been manipulate and control local politics as we
blamed in part on the austerity of the eco- have already seen.
nomic reforms. In such cases decentralization
can be a means to placate sub-national polit- Related to the rise of NGOs is that despite
ical tensions by apparently devolving power a de facto centralization the donors’ vision of
downwards, but without really liberating the state included a measure of decentraliza-
resources that might help ameliorate the tion and participation in the building up of
uneven development which neoliberalism civil society. Participation in development
tended to exacerbate. In Sierra Leone, became orthodoxy from the mid-1990s
following the cessation of hostilities, the onwards, when all the main development
donors supported a program to empower agencies had guidelines on how to make
local chiefs in an attempt to re-establish development more participatory (e.g. World
political legitimacy, while totally missing the Bank 1994).The move to Poverty Reduction
point that the civil war had been a complex Strategies (PRSs) at the start of the millen-
response to a social system in which the nium, based on popular participation and
privilege of the chiefs marginalized young country ‘ownership’ as the major vehicle for
people who went on to become the protago- development aid and planning, signaled a
nists in the civil war. In this sense strengthen- scaling-up of participation from localized
ing of local government and increasing fiscal projects (Hickey and Mohan 2008).
accountability is used as a means of deflect-
ing attention from the fact that these debili- One of the key messages of participation
tating policy measures were devised and in development has been that power rela-
implemented centrally and undemocratically tions need to be reversed with the develop-
(Slater 1989). ment practitioner ‘handing over the stick’
to the participating beneficiaries (Chambers
The chieftaincy case in Sierra Leone dem- 1997), whereby the former gives control to
onstrates that one outcome of trying to reform the latter over the representation of their life-
the state or bypass it altogether as obstruct- worlds. At the heart of this epistemological
ing the market was to champion ‘non-state’ and political reversal is a belief that scientific
actors, most notably civil society organiza- approaches to finding out the needs of mar-
tions in the form of business associations and ginalized people are biased against them as
international NGOs. The motivations for they rely on Western forms of cognition and
donors and lenders using NGOs was two- rationality. Practically, this means that rather
fold, both revolving around a cynical view of than rely on formal literacy and/or quantita-
the state and a rather naïve, apolitical view of tive understandings of the world, preference
civil society. The first concerns delivery and is given to visual techniques and alternative
efficiency in service provision, the so-called literacies.

51

GILES MOHAN

Although the past three decades have seen time obscuring the causes of these contradic-
a neoliberal attack on statist approaches, there tions emanating from d-development.These
has been an increasing tendency within con- were then periodized from the colonial to
temporary Development Studies to focus on neoliberal regimes and finished by arguing
D-development rather than d-development that recent attempts to ‘devolve’ development
processes of development, in ways that often are part and parcel of these longer moves to
obscure the underlying politics of develop- obfuscate the effects of Global capitalism.
ment. Following Polanyi (1960), the develop-
ment of capitalism always disembeds people In the transition from developmentalism
from their social relations with policy seek- to globalism we saw a step-change in the dis-
ing to prevent social breakdown by the state courses and practices of development policy,
assuming trusteeship over subject populations even if the overarching dialectic between
in order to contain, maintain, and re-embed D/d development remained valid. In this the
them around discourses of organic commu- central state had been key, but now parado-
nity (Cowen and Shenton 1996). It is here xically bypassed through Civil Society
that participation is promoted as a way to Organizations and private firms while also
reconnect citizens with the much more com- being strengthened in some ways.This shows
plex and fragmented political field created by that rather than a zero-sum relationship
neoliberal globalization. Thus participation between state and markets, as some neo-
becomes a populist response to neoliberalism, liberals would argue, political power is central
which functions ideologically in two ways. to the creation and maintenance of markets.
First is the agency versus structure argument In the Global South, the donors have been
in which the promise of agency-centered the major vehicle for this institutional process
development diverts attention from the which has created what Harrison (2004) terms
structural causes of inequality and marginali- ‘governance states’ where donors are embed-
zation. Second, discourses of localism, civil ded at the heart of government through
society and decentralization (Schuurman 1997) things like direct budget support while all
are part of a neoliberal move to delegitimize the time espousing a discourse that they are
the state as a development actor and con- passing the ‘ownership’ of development to
comitantly to engender the freedom-seeking the sovereign states they deal with. So, we see
individual, ideally pursuing his/her freedoms decentralization as part of a strategy seeking
through the market. to weaken states and normalize the market.

Conclusion: South-South But as Polanyi argued the creation of mar-
development or neoliberalism kets generates a counter-movement which
without (obvious) imperialism needs to be contained, and here a discourse of
localism, community and participation has
So far it is argued here that all Development arisen over the past two decades to help contain
Studies has been implicated in imperial some of these negative consequences. Such
relations and that much of what appears discourses promise sensitive empowering
humanitarian intervention is driven by a local decision-making, responsive to revealed
need to contain the contradictions of capital- ‘needs’. But given that many of the structural
ist incorporation for countries and peoples causes of poverty remain off the radar and
of the Global South. In this way much know- certainly not addressed at a Global or national
ledge about development has functioned to level, then such localism becomes functional to
legitimize the need for and scope of these the marketization agenda as it further fragments
D-development interventions while all the and disempowers the poor, again all the time
claiming to give them ownership and voice.
52
In this localizing agenda, Development
Studies is not alone since we see a revived

LOCAL AND REGIONAL ‘DEVELOPMENT STUDIES’

localism in policy discourses in the Global Conyers, D. and Hills, P. (1984) An Introduction to
North (e.g. Stoker 2004, Pike et al 2006). Development Planning in the Third World,
However, if localism it is to avoid being Chichester: John Wiley.
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straints then it needs to be politicized in dif- Cooke, B. (2003), ‘A New Continuity with
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Mohan 2005). First, where participatory Development Management’, Third World
planning has had transformative outcomes, it Quarterly, 24, 1, 47–61.
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state-level program of social justice that pri- Development, London: Routledge.
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Deconstructions/Reconstructions, London: Sage. countries

Pike, A., Rodríguez-Pose, A. and Tomaney, J. Davidson, B. (1992) The Black Man’s Burden:Africa
(2006) Local and Regional Development, and the Curse of the Nation-State, Oxford: James
London: Routledge. Currey.

Polanyi, K. (1960) The Great Transformation:
The Political and Economic Origins of our Time,
Boston: Beacon Press.

Rakodi, C. (1986) ‘State and Class in Africa: A
Case for Extending Analyses of the Form and
Functions of the National State to the Urban
Local State’, Environment and Planning D:
Society and Space, 4, 4, 419–446.

Rondinelli, D., McCullough, J. and Johnson, R.
(1989) ‘Analyzing Decentralization Policies in
Developing Countries: A Political-Economy
Framework’, Development and Change, 20, 57–87.

Samoff, J. (1979) ‘The Bureaucracy and the
Bourgeoisie: Decentralization and Class

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Watts, M. (2003) ‘Development and Gov- Schuurman, F. (1997) ‘The Decentralisation
ernmentality’, Singapore Journal of Tropical Discourse: Post-Fordist Paradigm or Neo-
Geography, 24, 1, 6–34. liberal Cul-de-Sac?’ European Journal of
Development Research, 9, 1, 150–166.

On the contested terrain
of decentralization

Mamdani, M. (1996) Citizen and Subject:
Contemporary Africa and the Legacy of Late
Colonialism, Oxford: James Currey.

55



Section II

Defining the principles and values of
local and regional development



5

Regional disparities and equalities
Towards a capabilities perspective?

Diane Perrons

Introduction In this chapter I explore the polarized
character of contemporary growth processes
The contemporary world is characterized by and identify connections between growth and
difference rather than uniformity and inequal- inequality as it is experienced by different
ity on a global scale is stark and largely undis- social groups at the regional level. I consider
puted despite unparalleled wealth, advances the gulf between the highly developed insti-
in human ingenuity, and a vast array of poli- tutional policies for promoting equality and
cies to promote development and redress diversity at all spatial scales and enduring
regional and gender inequalities.Interestingly, inequality of outcomes.With some exceptions,
some of the widest regional and gender gaps a second gulf exists between policy aspirations
exist in affluent countries and regions and for greater equality between social groups,
among those experiencing high rates of eco- reflected, for example, by the European
nomic growth, especially in India and China Union’s (EU) requirement of gender main-
(Milanovic 2005b; Quah 2007). streaming in the Structural Funds, or the
equality and diversity strategies of regional
Uneven development is variously viewed bodies such as the Regional Development
as an intrinsic characteristic of capitalist eco- Agencies (RDAs) in the UK, and the atten-
nomic development and/or a necessary stage tion paid to equality and diversity in the aca-
through which countries pass in their path- demic literature on regional development,
way to a high-income society. Depending on whether in the regional studies or regional
welfare regime or variety of capitalism, high science variants (McCann 2007; Morgan
levels of inequality are also found in mature 2004; Pike et al. 2007).
high-income regions and income inequality
is associated with higher levels of disadvan- My argument is that current conceptions
tage in other spheres including health, edu- of regional development and regional growth
cation and crime (Wilkinson and Pickett are defined too narrowly and in ways that
2009). If the meaning of regional develop- inhibit the analysis and discussion of connec-
ment is to incorporate some sense of well- tions between economic change and well-
being, it is important to take note of being. I locate my argument within recent
inequalities within regions when measuring appraisals of regional studies especially regard-
regional performances. ing ‘what kind of regional development and

59

DIANE PERRONS

for whom’ (Pike et al. 2007) and the capabil- widening, with especially rapid growth in
ity perspective with respect to inequality and the urban regions in the East (Lu and Wei
development (Sen 1999; Nussbaum 2003; 2007; Ng 2007; Dunford, this volume).
Robeyns 2003). I review tendencies towards Gender inequalities are also wider in these
rising inequality at different geographical Eastern regions having expanded with the
scales and then identify links between economic reforms as enterprises and local
regional development and equalities policies. authorities secured greater autonomy over
Finally, I make a provisional attempt to widen wage setting (Ng 2007). Similarly, the UNU
orthodox measures of regional growth by WIDER study (Kanbur and Venables 2007)
drawing on the capabilities perspective to found wide regional disparities in 58 devel-
calculate a more comprehensive measure of oping and transition countries and in the 26
regional development together with a gender- countries for which temporal data was avail-
sensitive version in an attempt to bridge at able, spatial inequalities were rising. This
least some aspects of these divisions. This study also found that on balance these
approach is already used by the UNDP in increases were associated with increasing
the Human Development Index and is integration in the global economy through
emerging within the UK’s Equalities and trade and exports, meaning that it is not
Human Rights Commission (EHRC) in exclusion from the global economy that is
their equality measurement framework. The the source of inequality but rather the form
empirical illustration in the final section of inclusion (see Perrons 2009). Kuznet
relates to the UK but, in principle, the ideas (1955) identified an inverted-U relationship
and methods could be extended to a variety between economic growth and interpersonal
of locations and used in comparative work. income inequality, indicating how inequali-
ties would be small within low-income
Widening inequalities: regions countries, rise as development unfolded, but
and gender then narrow as the benefits of growth became
more widespread. In recent times this rela-
In the last 25 years, world income has dou- tionship is no longer clear as inequalities have
bled and society has never been more opulent been rising in high-income countries espe-
(Sen 1999). Nonetheless at a global scale, cially those following a neo-liberal model,
inequality between nations is wide and, but also in Scandinavia. This new pattern
depending on measures used, increasing leads Tony Atkinson to suggest that it makes
(Milanovic 2005a). Using GDP per capita, sense to speak more of a U-shaped rather
Branco Milanovic (2005a) shows that ine- than inverted-U model and to ‘episodes’
quality increased steadily from 1950 when rather than trends in inequality (Atkinson
each country is taken as a single unit, but when 2007; see also Monfort (2009) who develops
weighted by population, declined somewhat these ideas in more detail).
over the same period, largely as a conse-
quence of dramatic growth in post-reform Overall regional inequalities in GDP per
China. When China is excluded from the head declined in the EU between 1985 and
calculation, inequality has been fairly stable, 2006 as measured by the coefficient of varia-
if anything, increasing slightly in the last tion at the NUTS 2 level. For the EU 15
decade (see also Quah 2007). Both Milanovic these declines were most notable up until the
(2005b) and Quah (2007) also find that fast- mid-1990s,whereas for the EU 27,the decline
growing countries have experienced high continued up until 2005. These contrasting
levels of regional and interpersonal inequal- figures indicate how the new poorer member
ity. In China, regional inequalities have been states have caught up to some degree but
that among richer regions convergence has
60 been slower (Monfort 2009). However, this

R E GION AL D IS PAR ITIE S AN D EQUA LITIE S

summary figure disguises some important have been increasing and while the gender
variations in the patterns of growth and spa- pay gap has narrowed it remains wide and at
tial cohesion.What has happened is that the the current rate of narrowing will endure for
strong decline in inequalities between coun- a long time. Further, the narrowing in the
tries has been moderated by increases in gender pay gap is largely due to widening
regional disparities within countries, i.e. class inequalities such that men in the lower
some regions in poorer EU countries have deciles have experienced a decline in their
experienced rapid growth and moved closer earnings relative to other men, and while
to EU averages but moved further away from some women have moved into higher earn-
other regions within their own territories, ings categories the gender pay gap at the top
that continue to be marginalized, and across of the distribution remains wide (OECD
the EU as a whole the overall gap remains 2008; Perrons 2009).
immense and shows little sign of narrowing
or change (Monfort 2009).Thus as an index At the national level, interpersonal income
of the EU (EU = 100), GDP per capita inequality is higher in neo-liberal regimes
measured in purchasing power standards such as the UK and the USA in contrast to
(PPS) London scored 355.9 in 2006 while Scandinavian Europe or Japan, and given the
the value for the poorest region, Nord-Vest association between income disparities and
in Romania, was 24.7; when measured ten rising regional disparities, regional growth
years earlier these figures were 289.9 for does not guarantee rising affluence for all. In
London and 25.5 for Nord-Vest, indicating London, for example, the most affluent
that growth has been concentrated in an region in the UK, and ranked first among the
already rich region that has moved further European regions in 2006, 41 per cent of
ahead (Eurostat 2009). Of greater signifi- children are being brought up in poverty
cance for this chapter is the way that inter- (48 per cent in Inner London) and the gender
personal earnings inequalities are higher in wage gap in the upper deciles is roughly
the most affluent regions and although these one-third higher than the UK average, while
inequalities can be moderated by tax policies at the lowest decile it is similar to the poorest
these cannot be guaranteed and in regions regions (Figure 5.1) (CPAG 2008). Taking
closely following a neo-liberal regime, per- women and men separately, the inter-decile
sonal income disparities are very wide, with range is especially high for men in London;
the negative consequences for other aspects of they earn five times as much as the lowest
social well-being (Wilkinson and Pickett decile and this gap has risen significantly over
2009). Phillipe Monfort (2009), using EU the last decade (Figure 5.2). Elsewhere, while
data, finds a positive relationship between the gender gap remains high as illustrated
regional disparities and interpersonal income in Figure 5.1, the extent of inequality
disparities for most countries. More specifi- between women is less marked with inequal-
cally, in countries where regional inequalities ity between women being marginally higher
increased rapidly between 1995 and 2005, among women in Northern Ireland than
interpersonal disparities likewise increased among men. What this data shows is that
significantly.What this means is that regional the highest paid jobs are found in what are
development analysts who focus only on regarded as the most prosperous regions on
convergence at the European level could the GDP measure. Where overall earnings
conclude that progress was being made while inequalities are high at the national level
inequalities were rising at the regional level these inequalities are magnified in the most
within countries and within the regions. prosperous regions where the high-paid
jobs are disproportionately concentrated.
With respect to OECD countries inter- These high-paid jobs are found alongside a
personal income and earnings inequalities wide range of other forms of employment,

61

DIANE PERRONS

40.00 United Kingdom
35.00 North East
London
South East

Gender wage gap (hourly earnings) 30.00

25.00

20.00

15.00

10.00

5.00

0.00
10 20 25 30 40 50 60 70 75 80 90
Percentiles

Figure 5.1 Gender wage gap in earnings, UK regions, 2008.
Source: Calculated from National Statistics (2009b) (ASHE data)

including personal services which tend to be development process that ultimately tends
among the lower paid, so the overall out- towards equality (Kuznets 1955). Even this
come is one of greater earnings polarization framework has been challenged by new
in London compared to other regions of growth theory and its application within
the UK (Kaplanis 2007). As Leslie McCall spatial economics which shows how econo-
(2001: 6) found with respect to the US, mies of agglomeration lead to clustering
despite some narrowing of racial and gender and uneven development. These findings
inequalities at the national level, the best jobs have led to many empirical studies on clus-
are found in the more affluent regions and tering and are linked more generally to ideas
are still “heavily dominated by whites and of endogenous development associated with
men”. If measures of regional development the Italian industrial district or regional inno-
are supposed to reflect the character of the vation models and have formed important
regions and if affluent regions are used as a elements of consultancy and policy making
model for other regions to emulate, then it in the field of regional development over
would seem to be important to develop a the last three decades.This approach tends to
measure that reflects regional well-being be rather inward looking, focusing on con-
more broadly including internal inequality. nections within the region, yet despite the
volume of literature and advice, the relation-
Marxian theories suggest that capitalist ship between clusters of activity and the
development is inherently uneven. More development and growth of regions remains
orthodox approaches suggested that widen- rather unclear or fuzzy (Markusen 1999;
ing internal inequality is a stage in the

62

R E GION AL D IS PAR ITIE S AN D EQUA LITIE S

Inter-decile ratio (90/10 hourly earnings 6
excluding overtime) Male ft08
Female ft08
Male ft98

5 Female ft98

4

3

2

1

0 London South East Northern Ireland
United Kingdom North East East Midlands

Figure 5.2 Inequality in wages among men and among women in the regions (full-time workers, hourly
earnings excluding overtime) 1998 and 2008. The data plotted is the 90/10 inter-decile ratio for 1998 and
2008 using hourly earnings excluding overtime. What stands out is the high level of the gap between men
in London and its steep rise over the last decade. Elsewhere the gender differences are less marked and
in Northern Ireland the gap between women is higher than that between men. It is important to note that
in absolute terms, as shown in Figure 5.1, there is a wide gender wage gap in earnings at this level.

Source: Calculated From National Statistics (2009b) (ASHE data)

Dunford and Greco 2006; McCann 2007). a larger quantity of output, potentially pro-
What are more certain are the theoretical vide for gains to all. Many of the gains take
predictions of unevenness and continuing the form of externalities arising from either
patterns of regional inequality, measured by clustering or from the division of labour
statistics on regional growth. within the firm. These gains, which can be
cumulative, have to be recognized by indi-
Positive and negative externalities are asso- vidual agents in order to be realized, but in
ciated with concentration, agglomeration general terms arise from collective endeav-
and clustering (EC 2008).As gains arise from our, that is, from cooperative aspects of activ-
economies of scale within production in ities rather than directly from the private
both public and private firms and from activities of any single producer/supplier. A
external economies derived from proximity parallel case would be the classic illustration
of related activities, unevenness itself is not of extinguishing a fire through passing buck-
necessarily problematic.Within both Marxist ets along a chain rather than by individuals
and new growth theories unevenness arises running back and forth. Given that even in a
from productive efficiency: from economies global economy there are some limits on the
of concentration and centralization within overall scale of desired output, if these collec-
the Marxist perspective and economies of tive gains are realized in one location they
scale and proximity within new growth are less likely to be realized in another. As
theory. In both cases, these economies, which Ray Hudson (2007: 1156) succinctly points
mean that fewer inputs generate the same or
63

DIANE PERRONS

out, “some (regions) will ‘fail’ as part of the GDP per capita as a singular measure of
price of others succeeding”. Further, these regional performance is limited.
technical properties do not respect political
or administrative boundaries so are just as There is an extensive literature on the lim-
present within as between regions. This itations of GDP per capita as a measure of
being so the ‘problem’ of uneven develop- growth and well-being from simple critiques
ment does not necessarily arise from the relating to the compositional definition,
unevenness itself but from the differential e.g. to what is included and excluded and
appropriation or distribution of what are whether polluting ‘goods’ should count as
effectively social gains, that is from social contributing to economic growth, to the
choices made with respect to the distribution capabilities perspective as utilized within
of collective efficiency gains. There is an UNDP methodology and discussed further
argument therefore that the gains should be in this chapter, to demands for even broader
shared rather than privately appropriated, just understandings of well-being based on ideas
as the negative externalities or losses in the of happiness (see Layard 2005). Elsewhere, I
form of congestion, higher rents or pollution have disaggregated GDP into two constituent
are socialized. elements – an employment rate and a produc-
tivity rate – and mapped the distribution of
The logic of this argument suggests there EU regions (Perrons 2009; see also Dunford
is no inherent reason why a geographically 1996), but in this chapter I develop a more
unbalanced distribution of economic activity comprehensive measure of regional develop-
should be associated with inequality in well- ment having first reviewed the links between
being. Further, given that inequality within equalities and cohesion policies which make
the more affluent regions tends to be higher such a broader measure more necessary.
than in other regions and inequality itself is
associated with lower scores on other aspects Policies for equality
of social well-being, it is important to take and regional cohesion
a broader view of what constitutes overall
regional development, especially given the Equality between women and men has been
existence of other state policies that advocate enshrined in the EU since its inception, the
greater equality. This recognition opens the 50th anniversary being celebrated in 2007.
way for thinking about ways in which the Over time equalities policies have become
regional growth and development might more prominent; gender mainstreaming was
be measured to take account of inequalities adopted in 1997 and formally implemented
and how the regional development and equal- in the Structural Funds from 1999, meaning
ities agendas could be considered potentially that all policies, at all stages of design,
complementary. implementation and evaluation have to be
monitored for their gender implications.
In this respect the EU’s economic and social Subsequently equalities legislation has been
cohesion policy consists of two elements: an extended to other areas of social disadvan-
efficiency element which relates to the levels tage including ethnicity, sexual orientation,
of productivity or the extent to which age and disability but these issues have not
regional resources are efficiently utilized and yet been mainstreamed. Specifically Article 2
an equity element which relates to reducing of the EU Treaty sets out the fundamental
disparities in the standard of living but in value of gender equality; Article 3 relates to
practice there is no reason to assume that gender mainstreaming; Article 13 requires
these different dimensions would move in member states to combat discrimination by
synchrony. For example, regional disparities sex, race, ethnicity, religion/belief, disability,
in GDP per capita may narrow but interper-
sonal inequalities within regions rise, so using

64

R E GION AL D IS PAR ITIE S AN D EQUA LITIE S

age and sexual orientation; and Articles 137 to be the engine of employment growth in
and 141 refer to securing gender equality in Europe”.
the labour market and to the principle of
equal pay for work of equal value. Regional policy in the UK also reflects
the shift from redistribution to promoting
Gender mainstreaming was firmly embed- growth and competitiveness in all regions
ded in the Structural Funds for the period but at the same time the Regional Deve-
2000–2006 and moved gender from the mar- lopment Agencies, as public bodies, have a
gins of social policy to the mainstream of legal duty to promote gender equality. The
economic thinking and served to “shake tra- UK’s Equalities legislation covers six key
ditional gender norms” especially in “gender characteristics of inequality: gender, ethnicity,
conservative contexts” (Aufhauser 2007:1). In disability, sexual orientation, age, religion/
addition, gender mainstreaming has ensured belief, but there is only explicit legislation to
that the gender implications of regional promote equality in the case of race and
growth, planning and transport, which tradi- gender (see Ahmed (2007) for a parallel dis-
tionally were considered purely technical or cussion of legislation with respect to race).
gender-neutral concerns, are articulated and The Regional Development Agencies have
taken into account in the design and moni- produced separate schemes and plans to pro-
toring of regional programmes.Thus projects mote gender and race equality within their
put forward for Structural Funding have to own organizations and in the delivery of
pay attention to gender equality issues in their services. With respect to gender, the
both formulation and subsequent evaluation. legislation only came into effect in 2007 so
Various tool kits have been designed to that, while plans have been made to meet the
enable regional and local agencies to fulfil legislative requirements, they have not yet
these requirements and a range of projects been evaluated, but nonetheless contain ex-
have been funded by the EU, under the ante criteria for evaluation.
European Social Fund and to a lesser extent
as part of the general regional programmes Some of the measures for success do not
under Objectives 1 and 2 and assessed from a mean necessarily that progress has been
gender perspective. made in securing greater gender balance but
more simply that gender issues have been
In the regulation of the Structural Funds considered.The South West Regional Deve-
and Community Strategic Guidelines on lopment Gender Equality Scheme, for exam-
Cohesion for the period 2007–2013, ple, indicates that with respect to economic
although gender remains prominent it has inclusion, the measure of success would be to
become more of a cross-cutting theme. The ensure that the level of and reasons for gender-
policy stance towards regional equality has related worklessness are clearly understood
also shifted from a focus on redistribution across geographical areas (SWRDA 2008).
towards lagging regions to one of enhancing Nonetheless they carry out gender audits in
growth and competitiveness within all regions. relation to regeneration schemes and simply
Within this more narrowly economic and thinking through some of the gender impli-
competitive context equalities issues seem cations at least raises awareness of the rela-
more ephemeral, even though women’s tions between regional planning and gender
employment has been of central importance equality issues.
to employment growth in the early years of
the twenty-first century, with six of the eight Plans for promoting gender equality are
million jobs created in the EU since the legal requirements and reflect high levels of
launch of the Lisbon Strategy being taken up aspiration towards securing equality but sim-
by women and leading the EU (2007: 5) to ilarly to other policies, the relation between
remark that the “female labour force continues these objectives and others with which they
may potentially conflict are rarely specified.

65

DIANE PERRONS

There is an implicit assumption that com- well-being or development and to better
mitment to equality will somehow lead to reflect the substantive opportunities individ-
equality. In this way, the policies are perfor- uals have in order to achieve particular states
mative. As Sara Ahmed (2007:1) argues in of being or to undertake particular activities.
relation to race equality, “doing the docu- In contrast to the UNDP measure which
ment” can to some degree be seen as suffi- focuses on life expectancy, education and
cient or a be a substitute for “doing the deed.” income, the EHRC has defined ten domains:
It is difficult to avoid the conclusion that life; physical security; health; education;
there is an imbalance between lofty aspira- standard of living; productive and valued
tions on the one hand and serious evaluation activities; participation, influence and voice;
and more equal outcomes on the other.The individual, family and social life; identify,
tick-box approach, noting that gender has expression and self-respect; and finally legal
been considered, along with the holding of security. The EHRC also examines inequal-
conferences and workshops are often taken ity by six identity characteristics: gender, eth-
as sufficient measures of achievement. nicity, disability, sexual orientation and
identity, age and religion/belief (Vizard and
One reason for the prevailing sense of Burchardt 2008). Further, sticking to the
gender fatigue among policy makers, in con- capabilities approach these inequality indica-
trast to the enduring interests in growth and tors are not simply imposed from outside but
competitiveness, may be the lack of explicit incorporate an element of substantive free-
connection between measures of economic dom by involving people in their construc-
development and equality. This lack of con- tion or more specifically engaging in a
nection might also explain the general process of deliberative discussion with those
absence of discussion about interpersonal involved to define appropriate domains. So
equality in the academic literature on regional there are three aspects of inequality – in
development which likewise largely follows outcome, autonomy and in process.
a narrowly defined economic agenda (for
some exceptions see Rees 2000; Greed 2005; Again in contrast to UNDP methodology,
Aufhauser 2007). In the rest of this section I in measuring or portraying inequality the
address this concern by considering how EHRC aims to maintain this comprehensive
understandings of regional development picture by developing a “substantive freedom
might be modified to incorporate equality matrix” (Vizard and Burchardt 2008: 7;
concerns and more specifically how the EHRC n.d.) rather than collapsing these
Equality Measurement Framework currently dimension of inequality into a composite
being developed by the UK’s Equalities and indicator. This matrix consists of three
Human Rights Commission (EHRC) might (aspects); ten (domains) and six (characteris-
be incorporated within measures of regional tics) and even then each domain requires
development. In the final section, I outline a more than one measure. So in practice this
model or index utilizing a simplified version matrix would require at least 180 data items
of the Equality Measurement Framework for and even then would not reflect the com-
assessing regional well-being in the UK. plexity of social reality. Social class, for exam-
ple, is not mentioned and while people can
The UK’s EHRC is developing an be defined on the basis of a single character-
Equalities Measurement Framework which istic such as gender, age, ethnicity or disabil-
derives from the capability perspective in ity, in reality, these identity characteristics
order to reflect the multi-dimensional char- intersect, so gender and age are ethnicized,
acter of inequality.The capabilities approach and ethnicity is gendered and aged, and so on
derives from the work of Amartya Sen (1999) with the other characteristics.Taking account
and is designed to overcome the limitations of intersectionality between the identity
of a purely income or growth measure of

66

R E GION AL D IS PAR ITIE S AN D EQUA LITIE S

characteristics would expand the data provide a reflection of regional well-being to
requirements further.To simplify the process contrast with the narrowly economic focus
‘spotlight’ indicators may be chosen to enable of current measures.
the EHRC to report on change on a few
characteristics consistently over time while Measuring gender and diversity
‘roving’ indicators (Vizard and Burchardt in the regions: a capabilities
2008: 22) may be defined to highlight spe- approach
cific concerns as they change from year to
year, but these have yet to be defined. Using statistics to define regions creates a
partial view of regional well-being. Regions
While such measures may more closely with high levels of Gross Valued Added
approximate lived experiences there is a (GVA) per capita are generally portrayed as
danger that they simultaneously lose the successful and creative; those with lower
power to provide an indication of equality, GVA used to be portrayed as lagging regions
i.e. an indicator (rather than complete pic- (reflecting the idea that they may catch up
ture) of potential social concern or achieve- one day) but now are more likely to be por-
ment. There is clearly a risk that its “very trayed as ‘failing’ or ‘being challenged’.Table
comprehensiveness. . . (could) drown out the 5.1 portrays a GVA ranking of the regions
sense of direction so important for purpose- and shows that the most prosperous regions
ful policy-making” (Hirschman 1958: 205; are in the South of England with London
also cited by Pike et al. 2007: 1263). While ranking first followed by the South East and
this framework might provide a useful way of East. This pattern has been fairly stable over
mapping inequality and have resonance with the last 15 years with some movements
people’s experiences it is almost certainly too between closely ranked regions. For example,
detailed to utilize in a practical way to esti- the East region displaced Scotland in 1993 as
mate regional well-being. Moving away from the third most prosperous region, Wales dis-
the comprehensiveness, philosophical purity placed Northern Ireland in the lowest posi-
and individualist human rights stance of the tion from 1992, and in the majority of years
EHRC’s approach, below, I modify a subset
of the capabilities defined by the EHRC to

Table 5.1 Regional rankings workplace-based gross value added per capita
(current prices) 2006, household disposable income per capita 2005

Region Index of UK Rank GVA Index of UK Rank disposable

per capita income per capita

London 155 1 120 1

South East 109 2 113 2

East 95 3 107 3

Scotland 95 4 95 5

South West 94 5 100 4

East Midlands 91 6 94 6

West Midlands 89 7 91 9

North West 87 8 92 7

Yorkshire and the 86 9 92 8

Humber

North East 81 10 86 12

Northern Ireland 81 11 87 11

Wales 77 12 89 10

Source: Calculated from National Statistics (2009)

67

DIANE PERRONS

the North East falls just behind Northern education 16–18 respectively. Northern
Ireland (in 2006 their relative positions with Ireland performs best on both measures and
respect to the UK are identical, their order in the East is consistently in third place. For
Table 5.1 being purely alphabetical). If dis- other regions there is much greater variation
posable household income is used instead of between these measures. London is a partic-
work-place-based GVA per capita, the rank- ularly interesting case; it ranks fifth on GCSE
ing is very similar and likewise is stable over but eleven on three A levels. In addition,
time. In both cases the data show a divide London comes first when regions are ranked
between London and the South East, espe- on the proportion of the working population
cially London and the other UK regions; the with degrees. This difference between the
work-place-based measure highlighting the school population and the working popula-
concentration of high-value economic activ- tion indicates commuting but also that
ity; the residence-based measure reflecting a London attracts learned people, through its
lower but still high average level of income educational institutions and work opportu-
in London but that affluence is spread more nities, rather than generating a high percent-
widely across the South and East, in part age of graduates from young people raised
reflecting London’s wide commuter belt. there.This difference also raises the question
of whether measures of regional develop-
Ranking the regions on GVA per capita ment should provide a sense of life in the
disguises many characteristics of the region. regions or the characteristics of the region
I develop an index based on six of the capa- that might be attractive to inward investment.
bilities identified by the EHRC; though I Probably both are required to reflect these
collapse these into five measures. This com- different dimensions. In this chapter my focus
posite measure is completely contrary to the is on the former so only includes GCSEs and
EHRC’s methodology and ethos, but none- A levels as the measure of knowledge.
theless still provides a more comprehensive
measure and reflection of regional develop- For the standard of living and productive
ment that takes internal inequality within and valued activities, I use three criteria:
the regions into account and could counter employment, measured by the employment
or be juxtaposed alongside the narrowly eco- rate; earnings, based on a composite measure
nomic perspective.The capabilities I draw on of median earnings to give a broad sense of
are to be: alive, healthy and knowledgeable; well-being together with the index of earn-
to have an adequate standard of living, and ing inequalities, to reflect differences within
finally to engage in productive and valued the region; plus child poverty to reflect how
activities. well economies provide for the well-being of
the most junior citizens (Poverty Site 2009).
With respect to life and health I use infant
mortality as a single measure. Infant mortal- I measure these elements using the UNDP’s
ity has declined significantly across all regions methodology for the HDI and combine them
of the UK since the 1980s but regional dif- to form the Regional Development Index
ferences persist and reflect a number of (RDI). Using some slightly different elements
aspects of well-being including the quality, (gender-differentiated statistics for education
provision and take-up of services, as well as and employment; the gender wage gap for
parental health and well-being. earnings; but the same child-related measures)
I then calculate a Gender-sensitive Regional
For knowledge, I calculate a composite Development Index (GRDI) (Figures 5.3
measure based on the proportion of people and 5.4).
securing five GCSE at grades A–C and the
proportion securing three A levels; these In calculating these indices I have drawn
qualifications are obtained at leaving second- on the EHRC’s Equality Measurement
ary school at 16 and after two years, further Framework to reflect how equalities issues

68

GVA R E GION AL D IS PAR ITIE S AN D EQUA LITIE S
RDI
1 London
South East 1
2 South East
East 2
3 East
South West 3
4 Scotland
Scotland 4
5 South West
East Midlands 5
6 East Midlands
Northern 6
7 West Ireland 7
Midlands
Wales
8 North West
North East 8
9 Yorkshire and
The Humber North West 9

10 North East Yorkshire and 10
The Humber
11 Northern
Ireland West 11
Midlands
12 Wales
London 12

Figure 5.3 Models of regional development gross value added and the Regional Development Index,
2006–2008. The years for the different elements of the index vary slightly between 2006 and 2008.

Source: Data for these indices National Statistics (2009a and 2009b)

are represented in a high-income country but range of other items should be considered
draw directly on the simpler framework and including violence, pension rights and so on.
methodology developed by the UNDP to By moving away from conventional GDP
calculate the RDI and GPDI (UNDP 2007: measures and towards a wider understanding
technical note 356–360).This is very much a of development which has some resonance
preliminary, illustrative attempt to open dis- with the capabilities perspective this exercise
cussion on ways of measuring regional devel- may assist in thinking about ‘what regional
opment rather than a proposal for a definitive development means and for whom’ (Pike
set of measures, which would require much et al. 2007).
deeper consideration of the items to be
included and how they should be measured. Figure 5.3 contrasts the rankings of regions
In relation to gender, for example, ideally a on the RDI model with the GVA per capita
view. The most notable difference between

69

DIANE PERRONS GRDI

GVA London Wales 1
1
2 South East South East 2
3
4 East South West 3
5
6 Scotland Scotland 4
7
8 South West East 5
9
East Midlands North East 6
10
11 West East Midlands 7
12 Midlands
North West North West 8

Yorkshire and Northern 9
The Humber Ireland
North East
Yorkshire and 10
Northern The Humber 11
Ireland West 12
Wales Midlands

London

Figure 5.4. Models of regional development gross value added and the Gender Regional Development
Index, 2006–2008. The years for the different elements of the index vary slightly between 2006 and 2008.

Source: Data for these indices National Statistics (2009a and 2009b)

these different ways of portraying regional benefited men to a greater extent than
development is the way that London moves women,and supports criticisms of the finance
from first to last position; the West Midlands focus of the last 20 years of development in
ranking also declines. By contrast the posi- the UK. Likewise in the case of Wales,
tions of Northern Ireland and Wales improve the North East and Northern Ireland which
considerably. The changes for other regions rank in the lowest positions on the GVA
are less dramatic and Scotland retains fourth method, all improve when broader aspects of
place on each of the indices. well-being are considered, suggesting that
their portrayal as failing overlooks the ways
Figure 5.4 contrasts the rankings of regions in which their development may have been
on the GRDI model with the GVA per more socially inclusive.
capita and similarly shows how the relative
position of London changes but also shows a Clearly greater equality is not necessarily
dramatic reversal in the position of Wales. an advantage if that equality is based on a
Both the RDI and the GRDI incorporate lower overall level of well-being,though there
the judgement that inequality and distribution are data to suggest that inequality itself is
matter to well-being and may more closely socially damaging independently of the abso-
approximate the experience of living in the lute level of well-being (Wilkinson and Pickett
region. Focusing on gender (see Figures 5.1, 2009) but to base success on narrowly inclu-
5.2 and 5.4) likewise indicates the way in sive models of development would also be
which the fruits of competitiveness have limiting. In the case of London, for example,

70

its extremely high position on the GVA per R E GION AL D IS PAR ITIE S AN D EQUA LITIE S
capita measure presents a view of a successful
and competitive region that while correct Conclusion
in some ways overlooks how experience
of life in London is highly differentiated. The processes generating current inequalities
Visually, walking across Waterloo Bridge at are so profound and embedded that it may
night provides a stunning vista of city life but be necessary to move beyond marginal
closer inspection of nearby streets presents a adjustments to the current neo-liberal ortho-
very different image. Likewise the presenta- doxy through redistribution and begin to
tion of the North East, Northern Ireland or specify more inclusive models of growth
Wales as failing regions with decaying indus- and development in order to realize policy
trial economies overlooks the existence of aspirations for greater interpersonal and
wealthy as well as desolate villages and the spatial equality. In this chapter I have
greater prominence of more egalitarian addressed this issue and attempted to redress
public sector employment.To address specific current policy fragmentation or disjuncture
problems it is important to examine the rel- between equalities policies focused around
evant statistics separately and in this sense a individual deficits, and growth policies
composite measure disguises important dif- focused on abstract economic entities or
ferences. Nonetheless, given the way that the regions with little attention given to the lived
single GVA per capita measure is used as a experiences of the inhabitants. To do so I
summary measure to influence regional poli- proposed an index of regional development
cies it is important to consider alternative that incorporates aspects of interpersonal
more comprehensive measures. Developing equality derived from a capabilities perspec-
different ways of measuring economic devel- tive and drew contrasts with more orthodox
opment at least provides a stimulus for think- measures based on GVA.While the estimated
ing about what constitutes development, and indices are very provisional they may serve to
for linking interpersonal inequalities with open academic debate and policy discussion
spatial inequalities, issues that have been regarding the different ways in which regions
linked and on the agenda for a long time at can be portrayed.
an international level and within EU and
UK policies at the regional and local levels Taking equalities aspirations seriously and
but less so within the regional studies aca- looking at interpersonal dimensions of ine-
demic literature. quality provides a different view of the
regions compared to one based on growth
As the data in Figures 5.3 and 5.4 shows, alone. With respect to the UK, while there
what appears to be the most successful region are parallels between measures based on GVA
on measures of economic growth is prob- per capita, this relationship is not consistent.
lematic when questions of distribution and In particular it does not relate to the most
equity are taken into account. Given that prosperous region, London, which moves
government policies promote both competi- from first place on the GVA per capita meas-
tiveness and cohesion, growth and equalities ure to last place on the regional development
and especially since gender issues are main- and gender-sensitive regional development
streamed in the European Structural Funds indices owing to wide social divisions
and within the Regional Development between residents. So London is not a pros-
Agencies in the UK, it seems important perous region as such but a region where
that measures of regional development take prosperous people and firms reside alongside
account of inequality when measuring per- high levels of interpersonal inequality and
formance.The indices outlined in this chapter child poverty. Given that regions lower down
provide one possible way of so doing. the distribution rank more highly on meas-
ures linked with social welfare suggests that
rather than being portrayed as failing regions,

71

DIANE PERRONS

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Perspective’, in O. Kramme and P. Diamond (2007) ‘What Kind of Local and Regional
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73

6

Inclusive growth
Meaningful goal or mirage?

Ivan Turok

Introduction between rich and poor has grown since the
1980s and that the number of people falling
The challenge at the heart of local and below the poverty line has also increased in
regional development is to build a more pro- most advanced economies (OECD, 2008;
ductive economy while cutting poverty and Dickens and McKnight, 2008; Heidenreich
inequality. Governments around the world and Wunder, 2008; International Institute for
espouse the values of social justice and inclu- Labour Studies, 2008). Inequality is higher
sion while trying to raise productivity, boost still in most countries of the global South,
investment and create jobs. This tension has with the locus of poverty shifting from rural
been expressed in different ways at different areas towards cities (UN-Habitat,2008).Global
times – between efficiency and equity, wealth social and spatial divisions seem to have been
creation and distribution, self-interest and growing despite expanding world output,
solidarity, prosperity and fairness, or com- prompting questions about why growth isn’t
petitiveness and cohesion. Meanings vary, but being shared more fairly and the ‘rising tide’
they allude to a common belief that spatial isn’t lifting all boats (Green, 2008). Social
development policy should craft together mobility also seems to have stagnated in
different values and realities, and promote many places, levels of trust and engagement
what is often summarised as inclusive growth. in public institutions have diminished, and
This stems partly from a moral sense that localised concentrations of poverty have
everyone should gain from a more affluent persisted, risking entrenched exclusion and
society, along with a pragmatic realisation alienation from mainstream society (OECD,
that this should provide a more secure foun- 2008; Irvin, 2008).
dation for long-term economic progress and
stability. Meanwhile, highly educated groups have
gained rich rewards from global technologi-
The commitment to shared prosperity and cal change and financial deregulation, bol-
a broad economic development agenda has stered by cuts in top tax rates to attract talent
been called into question over the last two (Toynbee and Walker, 2008; Economist, 2009).
decades by the global trend of rising inequal- People have been encouraged to believe
ity.A range of studies have found that the gap that the success of the few ultimately makes

74

INCLUSIVE GROWTH

everyone better off.Traditional welfare poli- and discontent over the last two decades,
cies have been replaced by more individual- some observers have gone further to suggest
ised systems, with people reliant on private replacing the goals of wealth creation and
savings for their pensions and loans to fund material consumption by the broader values
university education. Labour markets and of well-being, happiness and mutuality
public housing systems have been liberalised (Layard, 2006; Jackson, 2009).
to attract investment and enable ‘adjustment’
to global forces through lower wages, flexible The purpose of this chapter is to review
work patterns and migration.And redistribu- some of the main arguments surrounding the
tive social and spatial policies have been challenges of poverty, inequality and eco-
revised to support national growth objectives nomic development. I consider different per-
(Fothergill, 2005; Pike et al., 2006; Hildreth, spectives on the relationship between growth
2009). In the global South, structural adjust- and inequality and discuss the merits of two
ment programmes and enforced privatisation orthodox policy responses – social protec-
have curtailed the developmental capacity of tion and welfare-to-work. Despite the differ-
many governments.The widespread assump- ent circumstances of the global North and
tion has been that the state is generally inef- South, I suggest there are some common
fectual, if not obsolescent, and that it has no guiding principles for a more effective and
alternative but to embrace market processes dynamic approach. I argue that inclusive
if it wants to improve long-run economic growth is a meaningful goal rather than a
performance on the basis that markets are mirage, although it requires clearer specifica-
rational, efficient and can’t be bucked. tion and cannot be achieved without active
state involvement in market mechanisms,
The global downturn has raised serious which tend towards unequal and uneven
doubts about this orthodoxy. The credit outcomes. Rewarding employment is the
crunch, collapse in world trade and jobs crisis most important pragmatic route to shared
have provoked unprecedented state activism prosperity, and requires governments to per-
to stimulate national economies, rescue fail- form different functions at different levels.
ing banks and bolster struggling firms and Local and regional development has a vital
industries. Grave concerns have emerged role to play, complemented by national poli-
about the dominant Anglo-Saxon model of cies that redistribute resources and regulate
financial capitalism, with its speculative ten- markets.
dencies, neglect of the real economy and
extravagant rewards for the few. Unfettered The chapter begins by considering the
market mechanisms and ‘sound macro- different dimensions of poverty and inequal-
economic principles’ have patently failed to ity, emphasising the need for a broad per-
deliver steady and sustained growth, let alone spective covering both relative and absolute
trickle down, prompting calls for concerted poverty. It then proceeds to examine the
intervention to reform economic structures, dynamics of change, distinguishing between
tackle sectional interests and protect the most temporary and persistent poverty, for indi-
vulnerable from the burden of the slump. viduals and across generations. The idea of
If the rising tide left some people and places equality of opportunity is more widely sup-
behind, a prolonged falling tide could usher ported than equality of outcome, especially
in a new age of austerity and cause extensive in seeking to improve economic performance.
hardship, especially with state resources The underlying causes of poverty are then
depleted by indebtedness from bailing out outlined, including individual, cultural and
the financial system. Faced with the paradox structural explanations.This provides the basis
of rising incomes alongside greater anxiety for exploring different policy responses in
the remainder of the chapter.

75

IVAN TUROK individuals or wider labour market or demo-
graphic processes. It tends to imply that the
The concepts of poverty appropriate response is to provide a basic
and inequality income and public services to those without
a means of living.The simplest way to finance
Absolute poverty is defined by the number this is by expanding overall tax revenues
of people below a given threshold or poverty through economic growth. Most of the
line. This is the minimum income per head global South needs the additional resources
required to achieve an adequate standard of because of the scale of hardship and modest
living in a given country. It depends on the national incomes.Wealthier countries may not
precise definition of essential needs and is need growth to fund poverty programmes,
influenced by the cost of food, shelter, trans- although the extra taxes avoid having to
port and other essential resources consumed divert funds from other purposes.There is no
by an average adult. The standard inter- need in either case to interfere with the basic
national poverty line used by the United structure of the economy or the distribution
Nations and World Bank is $2 a day, or $1.25 of income. Poverty can apparently be tackled
for extreme hardship.This concept has been through light touch government collecting
broadened over time to include lack of access taxes due on increased economic activity,
to services such as water, sanitation, health, i.e. via growth followed by targeted social
education and information (United Nations, spending.
1995). This breadth is reflected in the
Millennium Development Goals launched Absolute poverty also neglects the social
in 2000, which devote particular attention context, including the subjective feelings and
to poor health and low life expectancy attitudes of people on low incomes relative
(UN-Habitat, 2006). to wider norms and standards. Much research
has shown that people are poor mainly in
These dimensions have since been relation to the wider society, not independ-
extended further to reflect people’s own def- ently of their social environment (Wilkinson
initions of poverty through ‘livelihoods’ and Pickett, 2007, 2009). The social and
approaches.These stress personal capacities as economic distance or stratification between
well as needs, and include access to ‘assets’ groups is often more important than the
such as skills and knowledge; savings and absolute level of income in determining
credit; land, housing and natural resources, well-being, especially in countries where
and social and community networks. Ideas of most people have attained basic living stand-
resilience and stability are also important in ards. This is because health and welfare are
recognising vulnerability to poverty if peo- influenced by‘psychosocial’factors – whether
ple’s resources are insufficient to cope with people feel valued and respected by others, in
unexpected shocks (such as natural disasters, control at work and in their domestic lives,
conflict, family illness or death) or stresses and enjoy strong friendships. Large differ-
(such as loss of seasonal employment or ences in social status, reinforced by gaps
income, or steadily rising food or fuel prices) in material wealth and consumption, can
(Rakodi, 2002; Scoones, 2009). Livelihoods damage self-esteem and contribute to a range
approaches also encourage locally embedded, of stress-related diseases, obesity, addictions
place-based understandings of poverty and and even violent crime. Many of these costly
marginalisation, rather than highly general- problems are not confined to the poor, but
ised indicators introduced top-down. apply across society as a whole. It is well
known that poverty harms those who suffer
An absolute poverty line can give the insecurity and poor diets, but Wilkinson and
impression that the problem is soluble with Pickett show that it means greater anxiety
limited economic and social change. It says
nothing about the persistence of poverty
and whether it is caused by deficiencies of

76

INCLUSIVE GROWTH

and depression, poorer social relationships, social progress – these people were genuinely
worse health and higher mortality for society better off – yet relative poverty may have
overall. Hence, they argue that greater equal- grown because people above them did even
ity makes everyone better off.Their evidence better. The wider point is that both relative
in relation to social outcomes is strong, but and absolute poverty are important concepts,
the relationship between equality and eco- along with some broader notions of livelihood
nomic outcomes may be more complex, as and inequality. A partial, one-dimensional
indicated below. perspective may misrepresent particular local
or national conditions.
The concept of relative poverty reflects a
concern about social disparities and is usually Another important point is that poverty
measured by some fraction of typical incomes and its implications vary greatly in different
in a country.This link allows the poverty line contexts. Relative poverty is linked more
to change as a society becomes wealthier. directly to the distribution of income than to
The OECD and European Union use the the economic growth rate, whereas it may be
threshold of 60 per cent of the median the other way round with absolute poverty.
household income.This is the point at which This may mean that a more pressing priority
people are thought to struggle to share the for countries of the South is to generate
ordinary expectations of the majority. People additional resources for pro-poor policies,
below this level lack what most people take whereas social inequality is a greater concern
for granted. The median income is used in wealthier countries, where redistribution
rather than the mean in order to compare is more viable.This simple distinction ignores
against households in the middle of the spec- the possibility that growth may be generated
trum and ignore being influenced by the through poverty programmes, for example,
super-rich. There is still an empirical con- by bringing unemployed labour into pro-
nection between relative poverty and income ductive use. It also ignores differences within
inequality – more unequal societies have and between countries and the underlying
higher levels of relative poverty (OECD, causes of poverty and inequality. More light
2008), but they are not identical concepts. can be shed on this by considering the
The implication for policy is that tackling dynamics of poverty.
relative poverty requires a shift in underlying
social relationships, which may include inter- Poverty dynamics
vening in the distribution of income and
property, and challenging the systems that Poverty is not static and people’s experiences
create and perpetuate unequal educational and risks vary widely. Analysis of poverty
outcomes, segmented occupational hierarchies dynamics can reveal the trajectories of differ-
and other skewed opportunity structures. ent households and their chances of falling
into or escaping poverty. This helps to go
A shortcoming of the relative poverty beyond describing how many people are
measure is that it can conceal rising real poor at any point in time to know how long
incomes for people in the bottom half of the they remain poor and whether they experi-
spectrum if middle-income earners do even ence recurrent periods.People whose income
better. For example, a remarkable five hundred falls below the poverty line for a temporary
million people in China (some 40 per cent) spell may not even consider themselves poor,
were lifted out of a dollar a day absolute pov- for example, those moving between jobs,
erty by rapid industrialisation and economic absent through childbirth and students. Many
growth between 1981 and 2004, although others experience prolonged or recurrent
income disparities increased as well during low income, causing hardship, mounting debt
this period (UN-Habitat, 2008). This sharp
fall in material poverty meant undoubted 77